By Inyoung Hwang Jan. 13 (Bloomberg) -- The dollar weakened against 9 of the 16 most traded currencies on concern a Federal Reserve report may show the U.S. economic recovery is slowing. The pound rose for a fourth day against the dollar, its longest run of gains since November, after Bank of England policy maker Andrew Sentance was cited as saying interest rates may have to increase this year. The yen fell against all the major currencies before fourth-quarter earnings reports this week from companies including Intel Corp. and JPMorgan Chase & Co., which some analysts say will bolster equity returns. “The lackluster momentum for the U.S. recovery has resumed and that seems to be undermining the dollar right now,” said Andrew Wilkinson, senior market analyst at Interactive Brokers Group in Greenwich, Connecticut. The dollar was little changed at $1.4481 per euro at 11:44 a.m. in New York, from $1.4486 yesterday. Against the yen, the dollar gained 0.4 percent to 91.37 yen from 90.98. The yen weakened to 132.30 per euro from 131.79 yesterday. The yen advanced the most in a month against the dollar yesterday as stock markets declined and the People’s Bank of China raised reserve requirements for the nation’s lenders, reducing cash available to fuel the rally in risky assets. The dollar gained 7.7 percent versus the yen in December, the biggest monthly increase since February. Beige Book “The jury is still out on whether January will be a reversal of December for the dollar,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York “It was a little choppy yesterday as people were risk off, but we think the reversal is really already under way.” The Fed will release its summary of current regional economic conditions, known as the Beige Book, at 2 p.m. The report is used as a basis of discussion at policy meetings, which typically follow two weeks later. The Federal Open Market Committee next gathers on Jan. 27. “Past Beige Books have said the same thing, that things are slowly getting better, but today’s is probably going to be toned down,” said Joseph Trevisani, chief market analyst at FX Solutions, a currency brokerage in Ridgewood, New Jersey. “The market is really looking for something that will change the current complexion of things, and the Fed has been making some noise about pulling liquidity.” ‘Wait-And-See’ The British currency climbed versus the euro and the yen after the Guardian newspaper reported Sentance said the Bank of England may adopt a “wait-and-see” approach to review the effectiveness of its quantitative-easing program. “The comments from Sentance gave a sniff of a turn in the U.K. rate cycle, and that lifted the pound,” said Adam Cole, the London-based global head of currency strategy at Royal Bank of Canada. “It’s a bit premature in our view, but the comments moved the markets.” The pound climbed 0.6 percent to $1.6264 from $1.6164 yesterday, for its longest sequence of gains since the five days through Nov. 9. It strengthened to 89.32 pence per euro, from 89.63 pence, and appreciated to 148.41 yen, from 147.06. The euro strengthened after Greek Finance Minister George Papaconstantinou said the nation is on the right track to solve its problems and does not need bailing out. The European Union is helping Greece identify problems, Papaconstantinou said, according to Germany’s Handelsblatt newspaper. Carry Trade The yen declined as stocks rose. Analysts estimate that fourth-quarter earnings reports beginning this week will show S&P 500 profit rose 62 percent, according to data compiled by Bloomberg. “I still wouldn’t bet on an earnings disappointment,” said David Deddouche, a currency strategist at Societe Generale SA in Paris. “The yen is clearly now the funding choice for the carry trades. As long as we stay in the sweet spot for equities, the yen has weakening bias.” In yen carry trades, investors borrow the currency at Japan’s 0.1 benchmark rate to buy higher-yielding assets in other currencies. Investors should buy sterling against the Australian dollar targeting a gain to 1.92 per pound, Stephen Hull, a currency strategist at Morgan Stanley in London, wrote in a note today. The pound traded at 1.7641 Australian dollar, from 1.7570 yesterday. “Although Australia’s economic performance has been much better than that of the U.K. through the crisis, this is already priced into the currency market,” Hull wrote. Australian Dollar Traders pared bets that the Bank of England will hold its key rate at a record low of 0.5 percent, with the implied yield on the June short-sterling futures contract rising 2 basis points today to 0.84 percent. Australia’s dollar gained versus 10 of the 16 most-traded currencies on speculation a report tomorrow will show payrolls increased for a fourth month in December. Employers added 10,000 jobs last month, according to the median estimate of economists in a Bloomberg News survey. The Australian dollar gained 0.7 percent to 92.67 U.S. cents from 92 cents yesterday. On Jan. 11, the Aussie touched 93.26 U.S. cents, the highest level since Nov. 18.

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