VINACHEM

The dollar traded 0.9 percent from an 11-month high versus the euro before European Central Bank President Mario Draghi speaks today amid concern policy makers are struggling to contain the euro region’s debt crisis.

Europe’s common currency held yesterday’s decline as France and Italy prepare to sell debt next week. New Zealand’s dollar maintained a two-day gain versus its U.S. counterpart after a report showed the economy expanded in the third quarter by more than economists had forecast.

“The dollar is being bought as a refuge,” said Kengo Suzuki, manager of the foreign-bond department in Tokyo at Mizuho Securities Co., a unit of Japan’s third-biggest listed bank by market value. “We’re likely to see Europe’s debt problems get more serious in the first half of next year.”

The U.S. currency traded at $1.3063 per euro as of 6:50 a.m. in London from $1.3047 in New York yesterday. It strengthened to $1.2946 per euro on Dec. 14, the highest since Jan. 11. The dollar was little changed at 78.05 yen. The 17- nation euro bought 101.96 yen from 101.86 yesterday.

Draghi will hold a media briefing in Frankfurt today after a meeting of the European Systemic Risk Board. The ECB President said on Dec. 19 that lenders in the euro region will experience “very significant” funding constraints next year and that there are “substantial downside risks” to the economy.

Downgrade Risk

France will auction bills on Dec. 27, while Italy will offer debt maturing in 2014, 2018, 2021 and 2022 on Dec. 29. Standard & Poor’s said this month it may cut the credit grades of 15 euro nations, including Germany and France, the region’s biggest economies.

“The S&P downgrade of euro-zone sovereigns is hanging over the market but there is no definite timing,” Steven Englander, head of Group of 10 currency strategy at Citigroup Inc. in New York, wrote in a note dated today. “S&P probably wants to manage the announcement so as to have the least market impact.”

Italy’s Senate is set to give final approval today to Prime Minister Mari Monti’s 30 billion-euro ($39 billion) emergency budget plan, including a pension overhaul and a levy on primary residences. The ballot in the upper house will take place at about 2:15 p.m. in Rome following an address to lawmakers by Monti, Senate Speaker Renato Schifani said last night.

The euro has depreciated 2.4 percent against the dollar this year, poised for a second-straight annual drop. The yen has gained 3.9 percent versus the greenback and 6.5 percent against the shared European currency.

‘Bearish’ on Euro

“I’m bearish on the euro,” said Toshiya Yamauchi, a senior currency analyst in Tokyo at Ueda Harlow Ltd., which provides foreign-exchange margin trading services. “It will take more time until we see a resolution to Europe’s debt crisis.”

New Zealand’s gross domestic product expanded 0.8 percent in the three months ended Sept. 30 from the second quarter, government data showed today. Economists had estimated a 0.6 percent gain.

“New Zealand GDP growth rebounded strongly,” Barclays Plc currency strategists Hamish Pepper and Olivier Desbarres, wrote in a note today. “We remain constructive” on the kiwi dollar over the medium term.

The so-called kiwi was little changed at 76.99 U.S. cents from 77.04 yesterday after climbing 2 percent over the past two days. It traded at 60.09 yen from 60.14.

U.S. Economy

Demand for the dollar was limited before reports forecast to show confidence and spending among U.S. consumers is recovering, reducing the allure of safer assets.

The Thomson Reuters/University of Michigan final index of consumer sentiment probably rose to 68 this month from a preliminary reading of 67.7, according to economists surveyed by Bloomberg News before today’s report. Consumer spending grew 0.3 percent in November after increasing 0.1 percent the previous month, according to a separate survey before Commerce Department figures due tomorrow.

“U.S. economic numbers are improving,” said Ueda Harlow’s Yamauchi. “Positive figures on the U.S. economy nurture optimistic sentiment in markets, spurring dollar selling.”