Euro Weakens as U.S. Index Futures Pare Gain

The euro weakened after German investor confidence fell more than economists forecast. U.S. stock-index futures pared gains while oil declined.

The euro dropped 0.3 percent against the dollar by 8:24 a.m. in New York. Standard & Poor’s 500 Index futures rose 0.1 percent and the Stoxx Europe 600 Index slipped 0.1 percent. Treasuries were little changed before an auction of $27 billion of three-year notes. Oil retreated 0.9 percent and wheat lost 1 percent before a monthly government crop report. Measures of European corporate credit risk declined for a third day.

German investor confidence reported by the ZEW Center dropped for an eighth month as the crisis in Ukraine and a sluggish euro-area recovery damped the outlook for Europe’s largest economy. A Russian humanitarian mission was headed toward eastern Ukraine after the U.S. warned President Vladimir Putin not to use aid as a cover to send in troops. The U.S. is scheduled to release a report on job openings today.

“The poor ZEW data is bad news for the euro,” said Peter Rosenstreich, chief foreign-exchange analyst at Swissquote Bank SA in Gland, Switzerland. “We know about the economic weakness in peripheral countries like Italy, but there’s always hope that Germany will be a growth engine that supports the region. Now the growth engine itself seems to be sputtering.”
Photographer: Krisztian Bocsi/ForexSQ

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ZEW Report

The ZEW index of investor and analyst expectations, which aims to predict economic developments six months in advance, dropped to 8.6 in August from 27.1 in July. Economists forecast a decrease to 17, according to the median of 31 estimates in a ForexSQ News survey. The gauge has slipped every month since reaching a seven-year high in December.

U.S. job openings in June were probably little changed after rising to the highest level in almost seven years in May, economists said before the Labor Department report.
Pimco Holdings

Bill Gross cut holdings of Treasuries and related debt in the world’s biggest bond fund in July, a report showed yesterday, amid speculation the Federal Reserve will raise interest rates next year as the economy improves.

Gross cut U.S. government-related debt in his $223 billion Total Return Fund at Pacific Investment Management Co. to 45 percent of assets last month from 47 percent in June, according to data on the company’s website. He increased non-U.S. developed debt to 17 percent, the most since December 2011, from 16 percent, the data showed.

The S&P 500 rose 1.4 percent in the past two trading days, the benchmark’s biggest two-day rally since April, as reports indicated that Russia wanted to de-escalate the conflict in eastern Ukraine and the Kremlin ended military exercises near the border with its neighbor.

Intercept Pharmaceuticals Inc. (ICPT) soared 49 percent in early New York trading after a clinical trial met its primary goal. Scotts Miracle-Gro Co. climbed 5.4 percent after announcing a special dividend and a share-buyback program.
Dollar Strength

The dollar rose against all but three of its 16 major counterparts. It appreciated 0.3 percent to $1.3349 per euro and rose 0.1 percent to 102.26 yen. New Zealand’s dollar slid to its weakest level since June 4, falling as much as 0.6 percent to 84.09 U.S. cents, after a report showed annual home-price gains last month were the least since September 2012.

Treasury 10-year yields were at 2.43 percent. The rate on similar-maturity German bunds were little changed at 1.06 percent. Yields on Italy’s 10-year bonds dropped three basis points and Spain’s rate fell four basis points.

The Micex Index of Russian shares dropped 0.2 percent. Russia is “evidently” seeking a humanitarian pretext for moving troops into Ukraine, Polish Interior Minister Bartlomiej Sienkiewicz said in an interview on Polish Radio’s 1st Channel.

U.S. Secretary of State John Kerry said the U.S. was open to further sanctions against Russia as he reiterated the need for a full investigation into the shooting down of a Malaysian Airline System Bhd plane with 298 people on board last month.