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The euro weakened for a third day against the dollar, touching the lowest in almost three weeks, as concern the currency region’s rescue plan will crumble and the European Central Bank will cut interest rates damped demand. The 17-nation currency fell the most in two weeks versus the yen after Greek Prime Minister George Papandreou pledged to put the European Union’s latest accord to a referendum, risking pushing the country into default if rejected by voters. Papandreou’s call for a referendum and a parliamentary confidence vote raised the prospect of derailing the European bailout effort and pushing Greece into default. An opinion poll published Oct. 29 showed most Greeks believe the accord on a new bailout package and a debt writedown is negative. Group of 20 leaders gather for a Nov. 3-4 summit in Cannes, France, to discuss the debt crisis. Greece’s referendum plan poses a threat to financial stability in the region, Fitch Ratings said in a statement.
The dollar and yen strengthened as stocks slid around the world and data showed Chinese manufacturing slowed. The Dollar Index, which IntercontinentalExchange Inc. uses to track the U.S. currency against those of six trading partners, gained for a third day, rising 1.2 percent to 77.416. The dollar advanced versus all of its 16 most-traded counterparts after the China Federation of Logistics and Purchasing said its Purchasing Managers’ Index fell to 50.4 in October, from 51.2 the previous month.
Australia’s dollar slid against most of its major peers after the Reserve Bank of Australia lowered its cash rate target by 25 basis points to 4.5 percent. It was the first cut since April 2009. Sixteen of 27 economists surveyed by Bloomberg News predicted the move. The rest forecast no change.
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