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The euro snapped a four-day advance against the dollar on concern a likely interest-rate increase by the European Central Bank this week will hurt the economies of the most-indebted nations in the 17-member bloc.
The shared currency slid versus all but two of its 16 major counterparts before the ECB’s April 7 policy meeting, at which all economists predict the benchmark rate will be raised by 25 basis points from a record low 1 percent. A report today showed producer-price inflation in the euro-region accelerated at the fastest pace since September 2008. The yen erased an earlier decline against the dollar.
“It’s clear that a rate increase is going to inflict damage on peripheral Europe and the greater the realization of that in the market, the greater the chances of downside adjustment in the euro,” said Neil Mellor, a currency strategist at Bank of New York Mellon Corp. in London. “A lot of these peripheral nations are hanging on to their recoveries by their fingertips and the last thing they need is another rate increase.”
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