The euro rose against all its major counterparts as speculation increased that European policy makers will craft a long-term approach to handle the region’s sovereign-debt crisis. The 17-nation euro advanced the most against the currencies of commodity-exporting countries, such as the South African rand and New Zealand dollar, on concern China will take more measures to cool economic weakened, curbing appetite for raw materials. Canada’s dollar weakened, touching parity with its U.S. counterpart, after the nation’s central bank held interest rates unchanged. The U.S. dollar fell against the euro before a Federal Reserve policy meeting next week. “There’s still a degree of optimism that the leaders will deliver something on the European Financial Stability Facility fund,” said Alan Ruskin, global head of Group-of-10 foreign exchange strategy at Deutsche Bank AG in New York. The euro rose 1.7 percent to $1.3621, from $1.3388 Jan. 14. It touched $1.3626 yesterday, the highest since Nov. 23. The 17- nation currency climbed 1.4 percent to 112.48 yen, from 110.94 last week. The dollar fell 0.4 percent to 82.57 yen, from 82.87. Futures traders reversed their bets the euro will decline against the dollar, calling for a gain in the shared currency for the first time since November, figures from the Washington- based Commodity Futures Trading Commission show. Futures Bets The difference in the number of wagers by hedge funds and other large speculators on an advance in the euro compared with those on a drop -- so-called net longs -- was 4,109 on Jan. 18, compared with net shorts of 45,182 a week earlier. Euro-area finance ministers pledged at a meeting Jan. 17 to strengthen the region’s safety net for debt-strapped countries. Speculation has increased that leaders may boost the lending capacity of the European Financial Stability Facility, which is backed by 440 billion euros ($598 billion) in guarantees by euro-area governments, and expand the facility’s role to allow for debt purchases. The Ifo Institute’s business climate index, based on a survey of 7,000 German executives, was 110.3 in January, up from the 109.9 median of 41 forecasts in a Bloomberg News survey. That’s the highest since records for a reunified Germany began in 1991. Positive data in Europe “is taken in the context of what to do about peripheral debt issues,” said Jack Spitz, managing director of foreign exchange at National Bank of Canada in Toronto. “The data may be strong in areas of the euro zone that continue to be seen as the givers rather than the takers. It speaks to the dichotomy.” China Growth China’s economic growth quickened to an annual rate of 9.8 percent in the fourth quarter, up from 9.6 percent in the prior three months, the statistics bureau said in Beijing. Consumer prices rose 4.6 percent in December from a year earlier, compared with 5.1 percent the previous month. The People’s Bank of China will increase the key one-year lending rate to 6.81 percent from 5.81 percent this year and let the yuan strengthen about 6 percent against the dollar, Nomura Holdings Inc. forecast this week. “The market remains cautious on the outlook for commodity currencies,” said Omer Esiner, chief market analyst in Washington at Commonwealth Foreign Exchange Inc., a currency brokerage. “There’s a pretty strong concern around the outlook for China to continue tightening monetary and credit conditions in order to keep a lid on inflation pressures. That raises the risk of a potential hard landing for a key engine of the global recovery.” Rand Falls South Africa’s rand, the worst performer against the euro this week, lost 3.6 percent to 9.6124 per euro, from 9.2821 Jan. 14. The New Zealand dollar dropped 2.7 percent to 1.7943 per euro, from 1.7476 last week. Chinese President Hu Jintao met with President Barack Obama and business leaders in a visit to the U.S. this week. Obama said the yuan “remains undervalued” and urged Hu to continue steps toward a currency “increasingly driven by the market.” The Canadian dollar dropped after reaching the strongest level in more than two years versus the greenback after the Bank of Canada held its target lending rate at 1 percent and said future interest-rate increases would be “carefully considered.” Loonie Trades The loonie, as Canada’s currency is also known, weakened 0.2 percent to 99.31 Canadian cents after touching 98.38 cents Jan. 18, the strongest level since May 2008. It reached C$1.0031 Jan. 20, the weakest level since Jan. 4. The Swiss franc dropped 1.2 percent to 1.3055 per euro, from 1.2899 Jan. 14. Swiss central bank President Philipp Hildebrand said the franc’s ascent is curbing exports and hampering the country’s economic recovery. The franc has appreciated 13 percent against the euro during the past year as investors sought a haven from euro-area fiscal problems. The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners including the euro, yen and pound, fell 1.3 percent to 78.124, from 79.162 Jan. 14. Fed Chairman Ben S. Bernanke will keep interest rates unchanged at the central bank’s meeting on Jan. 25-26, according to all 92 economists in a Bloomberg survey. The Fed has kept its benchmark at zero to 0.25 percent since December 2008. To contact the reporter on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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