By Bo Nielsen
Bloomberg -- The dollar fell versus the yen after an industry report showed sales of existing homes dropped in September, increasing speculation the Federal Reserve will cut interest rates this month.
Purchases dropped 8 percent to an annual rate of 5.04 million last month, the National Association of Realtors said. The median forecast in a Bloomberg News survey was for a 4.5 percent drop to a rate of 5.25 million sales. The Fed meets next to set rates on Oct. 31.
``Another disappointing housing report will all but guarantee a rate cut by the Fed next week,'' said Omer Esiner, an analyst at currency-trading company Ruesch International Inc. in Washington. Esiner spoke before the report was released. ``That would be the nail in the coffin for the dollar.''
The dollar traded at $1.4264 euro at 10:01 a.m. in New York from $1.4263 yesterday. The U.S. currency fell to 114.09 yen from 114.78 yesterday. The dollar set an all-time low of $1.4348 per euro on Oct. 22.
Interest-rate futures traded on the Chicago Board of Trade show a 96 percent chance the Fed will cut its benchmark a quarter-percentage point to 4.5 percent on Oct. 31, up from a 54 percent chance a week ago. The Fed lowered its target a half- point to 4.75 percent on Sept. 18, the first reduction since 2003.
To contact the reporters on this story: Bo Nielsen in New York at bnielsen4@bloomberg.net .