23.07.201301:36:13UTC+00Dollar declines second day against Yen as fed rate increase bets recede

The dollar kneel down versus the yen for a second straight day as traders back down assumptions for when the Federal Reserve will start increasing interest rates.

The U.S. currency was 0.2 percent from its worst in a month against the euro before data on home prices, following figures yesterday that displayed residential sales unexpectedly decline. Fed Chairman Ben S. Bernanke told Congress last week that any downgrading in stimulus would depend on the performance of the economy. Demand for the euro was supported ahead of data tomorrow forecast to show services and factory output in the region contracted at the slowest pace in more than a year.

Housing Market

Home prices in the U.S. rose 0.8 percent in May, following a 0.7 percent advance the previous month, the Federal Housing Finance Agency will probably report today.

Economist Poll

The U.S. currency spiked last month after the Fed chief said the purchases may slow this year and stop in mid-2014 if economic progress meets policy makers’ projections.

Half of the economists surveyed by Bloomberg say the Fed will begin trimming bond purchases in September, up from 44 percent in last month’s poll.

A euro-area composite index based on a survey of purchasing managers in both the services and manufacturing industries rose to 49.1 in July from 48.7 the previous month, London-based Markit Economics is predicted to say tomorrow. That would match the level in March 2012. A reading below 50 signifies contraction.