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The dollar fell for the first time in six days against the currencies of major U.S. trading partners as global stocks pared losses and commodities gained, damping demand for the relative safety of greenback.
The euro rose from the lowest level against the dollar since September before sovereign-debt auctions in Portugal, Spain and Italy on speculation the currency’s biggest weekly drop since August would be hard to sustain.
“The market looks very short in euros against dollars and other major currencies,” said Hidetoshi Yanagihara, a senior currency trader at Mizuho Financial Group Inc.. “We’re seeing a short-covering ahead of the bond auctions.”
Canada’s dollar gained, reversing earlier losses, as the rebound in commodity prices overshadowed Europe’s sovereign-debt crisis. Crude oil, Canada’s largest export, rose 1.1%.
The Dollar Index advanced 2.5% last week in its biggest rally since August as reports showed U.S. services industries expanded in December at the fastest pace in four years and employers added jobs for a third month.
The greenback will gain 5% versus the euro and 11% versus the yen, according to Nick Bennenbroek, head strategist at Wells Fargo & Co. and the most accurate currency forecaster in the six quarters ended Dec. 31.
U.S. retail sales climbed 0.8% last month, the same amount as in November, according to the median forecast of economists in a survey before the Commerce Department publishes the figures on Jan. 14.
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