Bloomberg – The dollar fell the most in more than a month against the euro as signs manufacturing is expanding in the U.S. and China damped the appeal of safer assets.

The greenback weakened versus all of its most-traded peers after a U.S. factory gauge indicated the fastest growth in six months. Purchasing-manager indexes this week for China and India also showed manufacturing gains. The euro snapped a seven-day losing streak versus the yen, its longest since December 2010, after German unemployment fell more than forecast. Australia’s and New Zealand’s dollars rose to the strongest since November.

“The data that came out today was pretty positive,” said Mary Nicola, a currency strategist at BNP Paribas SA in New York. “It helped boost risk sentiment.”

The dollar fell 1.1 percent to $1.3073 per euro at 2:09 p.m. in New York in its biggest intraday decline since Nov. 30. The U.S. currency declined 0.3 percent to 76.66 yen. The euro gained 0.7 percent to 100.20 yen after falling to 98.66 yesterday, the weakest level since December 2000.

The greenback remained weaker versus its major counterparts after minutes of the Federal Reserve’s last policy meeting, released today, showed central-bank officials will for the first time make public their forecasts for the benchmark interest rate at their Jan. 24-25 meeting.

The Standard & Poor’s 500 Index of stocks climbed 1.7 percent and the Thomson Reuters/Jefferies CRB Index of raw materials added 2.6 percent.

The Institute for Supply Management’s factory index rose to 53.9 in December from 52.7 a month earlier, the Tempe, Arizona- based group’s data showed today. Fifty is the dividing line between growth and contraction, and economists surveyed by Bloomberg News projected the gauge would climb to 53.5.

‘More Risk-On’

“You get a good number like this and it continues” the trend, said Fabian Eliasson, head of U.S. currency sales at Mizuho Financial Group Inc. in New York. “The dollar is falling off, and it’s a little bit more risk-on.”

Brazil’s real gained the most against the dollar among its 16 major counterparts tracked by Bloomberg, adding 2.2 percent to 1.8306 per greenback. Mexico’s peso appreciated 1.7 percent to 13.6822 to the dollar.

China’s purchasing managers’ index for manufacturing increased to 50.3 last month from 49 in November, the logistics federation said Jan. 1. The reading exceeded all forecasts in a Bloomberg survey. India’s PMI for manufacturing rose to the highest in six months, HSBC Holdings Plc and Markit Economics said yesterday.

Dollar Index

The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, dropped 0.9 percent to 79.559.

The dollar has fallen 0.8 percent in the past week, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The greenback gained 1.1 percent last year, snapping two years of losses. The euro was the worst performer in 2011, sliding 2 percent.

U.S. employers added 150,000 jobs in December, compared with an increase of 120,000 in November, according to the median estimate of economists in a Bloomberg News survey. The Labor Department will release the report Jan. 6.

The euro extended gains after the Nuremberg-based Federal Labor Agency said German unemployment fell in December more than economists forecast. The number of people out of work slid a seasonally adjusted 22,000 to 2.89 million, the agency said. Economists forecast a drop of 10,000, a Bloomberg survey showed.

Basis Swaps

The cost for European banks to borrow in dollars tumbled to the lowest level in two months, according to a money-markets indicator. The three-month cross-currency basis swap, the rate banks pay to convert euro interest payments into dollars, touched 1.04 percentage points below the euro interbank offered rate, the least expensive since Nov. 9 on an intraday basis, according to data compiled by Bloomberg. It closed yesterday at 1.14 percentage points below Euribor.

Canada’s dollar may appreciate to a two-month high against its U.S. counterpart if it closes stronger than its 100-day moving average of C$1.0143, according to MacNeil Curry, head of foreign-exchange and interest-rates technical strategy at Bank of America Corp in New York. Such a close may spur the currency to parity, a level it hasn’t been at since Nov. 1. The currency gained 0.8 percent today to C$1.0107.

The Australian and New Zealand currencies climbed as equities rallied.

Australia’s dollar strengthened 1.3 percent to $1.0363 after climbing to as high as $1.0386, the strongest level since Nov. 9. The New Zealand dollar advanced 1.4 percent to 78.94 U.S. cents. It reached 79.06 cents, the most since Nov. 14.

European Crisis

Gains in the euro were tempered by concern the European debt crisis will hamper economic growth in the region.

European services and manufacturing output shrank for a fourth month in December, according to a Bloomberg survey before a report tomorrow from London-based Markit Economics. The data will confirm a composite index based on a survey of purchasing managers rose to 47.9 in December from 47 in November, below the 50 that indicates contraction, economists predict.

Futures traders last week boosted bets the euro will weaken. The number of wagers made by hedge funds and other large speculators betting on a drop in the 17-nation currency increased to a record 127,879 contracts more than those anticipating a gain, according to the Washington-based Commodity Futures Trading Commission.

–With assistance from Kristine Aquino in Singapore. Editors: Greg Storey, Dave Liedtka

To contact the reporters on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net; Keith Jenkins in London at kjenkins3@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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