The euro strengthened after a report showed inflation in the region accelerated to a two-year high this month, signaling policy makers may be moving closer to raising interest rates. The single currency gained for the sixth time in the past seven days against the dollar, rising versus 13 of its 16 most- traded peers. Inflation quickened to 2.4 percent from 2.2 percent in December, the European Union’s statistics office in Luxembourg said today. That’s the fastest since October 2008. New Zealand’s dollar weakened after a report showed home- building approvals fell to a 23-month low in December. The consumer-price report “underlines the ECB’s concern on inflation and will further contribute to the internal debate about what the appropriate response should be from the central bank,” said Michael Derks, chief strategist at FxPro Financial in London. Their concerns “are unlikely to go away in the short term, given the most recent performance of commodity prices, so they may well be one of the first major central banks to hike rates.” The single currency rose 0.3 percent to $1.3653 as of 10:37 a.m. in London. It appreciated 0.4 percent to 112.26 yen. Euribor futures fell, sending yields higher, as investors added to bets that policy makers will boost borrowing costs. The implied yield on the September 2011 Euribor contract rose almost four basis points to 1.67 percent. The New Zealand dollar depreciated 0.5 percent to 76.99 U.S. cents. Home-building permits declined 19 percent from November to 1,018, the lowest level since January 2009, Statistics New Zealand said in Wellington today. Excluding apartments, approvals fell a sixth month, dropping 11 percent. To contact the reporters on this story: Emma Charlton in London at echarlton1@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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