The euro weakened Monday as the credit crisis spread to Europe and banks there headed for bailouts while the yen saw gains as investors deserted carry trades amid chaos in the markets.

In Germany, a group including the German government and private banks and insurers mounted a rescue of Hypo Real Estate Holdings (FWB: HRX), the second largest lender on commercial properties in Germany, while BNP Paribas (Euronext: BNP; TYO: 8665) stepped in to take over Belgian units of Fortis (EuronextAMS: FORA; EuronextBRU: FORB; LuxSE: FOR) after a government rescue fell through.

In late morning trade in New York, the euro was worth ¥137.0184 while the US dollar traded at $1.3516 to the shared currency.

The pound was also up in relation to the euro, to 77.8p to the euro, while the shared currency declined in relation to the Swiss franc, to SFr1.5482.

The greenback was lower in relation to the yen, with the yen trading at ¥101.375 to the dollar while the Japanese currency was up to ¥72.7011 to the Australian dollar and to ¥46.938 to the Brazilian real.

The real was down to its lowest level in nearly two years, trading at R$2.162 to the US dollar.

The Canadian dollar, meanwhile, was down on falling oil prices and a decline of 13.5 percent in the number of building permits issued in August, against an expected decline of just 1.5 percent.

At nearly noon in New York, the loonie traded at C$1.1028 to the US dollar.

The pound was weaker versus the US dollar for the week after new data showed that the UK service sector contracted at its fastest rate in 16 years in September and after house prices fell yet again there, making it likely that the Bank of England will cut UK interest rates when its Monetary Policy Committee meets on 9 October, possibly by as much as half a percentage point.

In late morning trade in New York, the pound traded at 77.77p to the euro while it took $1.7739 or ¥188.0741 to buy a pound.

The US dollar was higher versus the euro Friday as demand for the greenback grew.

The dollar traded at $1.3796 to the euro at around 11:30 a.m. in New York, while at the same time it took ¥106.02 to buy a dollar and ¥146.2652 to buy a euro.

The euro was hurt by comments from Jean-Claude Trichet, the president of the European Central Bank, that the bank considered cutting interest rates before deciding yesterday to hold the rate at 4.25 percent for the time being.

Meanwhile, sentiment has the Federal Reserve likely to cut US interest rates by from half a percentage point to three-quarters of a percentage point at its next meeting, scheduled for 29 October.

The US dollar gained on the euro Wednesday on demand for US dollars from foreign banks and ahead of a Senate vote on the $700 billion bailout proposal and a proposal to raise FDIC protection on deposits from $100,000 to $250,000.

The euro declined ahead of Thursday’s meeting of the European Central Bank, where Eurozone interest rates are expected to be held at 4.25 percent.

In late morning trade in New York, the dollar traded at $1.4030 to the euro.

The pound weakened against the dollar and the euro after the Chartered Institute of Purchasing and Supply reported that its manufacturing index dropped to 41 in September from 45.9 in August, indicating that manufacturing activity in the UK contracted last month.

At around 11:30 a.m. in New York, the pound traded at 79.05p to the euro, while it took $1.7747 to buy a pound.

Despite its gains against the euro and pound, the greenback was weaker in relation to the yen after the Institute for Supply Management reported new numbers which showed that US manufacturing activity also contracted in September, with the ISM’s factory index falling from 49.9 in August to 43.5 in September.

The yen traded at ¥105.58 to the US dollar in New York trade.

The Australia and New Zealand dollars both declined in relation to the greenback on expectations that their central banks will cut interest rates soon as well as on declines in commodities prices.

In the latest report, it took 79.05 cents US to buy an Aussie while the yen was stronger in relation to the Australian currency, trading at ¥83.6823 to the Aussie.

The kiwi declined to trade at 67.48 cents US, but it gained on the yen, to ¥71.387 to the New Zealand dollar.

The euro was weaker versus the US dollar and the pound on Tuesday, with declines coming on the rescue of Belgian-French bank Dexia (Euronext, DEXB, DX; LuxSE: DXB).

France and Belgium will give Dexia around $9.2 billion after its shares dropped by a record 28.5 percent on Monday.

The greenback, meanwhile, was helped by sentiment that Congress will revisit and pass a bailout of the US financial sector and by reports showing that US consumer confidence rose in September and business activity slowed less than had been expected.

In late morning trade in New York, the dollar traded at $1.4057 to the euro while the shared currency declined versus the yen to ¥149.0332 but the yen dropped to ¥106.02 to the greenback.

The pound was stronger on statements out of the US from the ranking Republican on the Senate Banking Committee and from Democratic presidential candidate Senator Barack Obama that a bailout plan will be passed.

At around 11:30 a.m. in New York, the pound traded at 79.05p to the euro while it took $1.7784 to buy a pound.

The gains on the US currency came after earlier declines on a report that UK consumer confidence remained near record lows in September.

The belief that a bailout of the US financial sector will be approved helped the South African rand gain on the dollar, with the rand trading at R8.3215 to the greenback and at R11.702 to the euro, also a gain for the South African currency.

The Brazilian real also saw gains on US bailout hopes, with the real trading at R$1.9260 to the US dollar after falling to more than R$2 to the dollar on Monday.

The pound and the euro both saw declines Monday after governments had to bail out more than one bank in order to avoid collapse.

The UK treasury took over mortgage lender Bradford & Bingley (LSE: BB), making it the second UK bank to be nationalized after Northern Rock (LSE: NRK) was taken over in February, in addition to the emergency sale of HBOS (LSE: HBOS) to Lloyds TSB (LSE: LLOY) earlier in September.

Bradford & Bingley’s branches and deposits will be bought by Spain’s Banco Santander (IBEX-35: SAN; LSE: BNC; NYSE: STD).

Meanwhile, Belgian bank Fortis (EuronextAMS: FOR A; Euronext FORB; LuxSE: FOR) was bailed out by Belgium, the Netherlands and Luxembourg after it spent too much on its purchase of ABN Amro (Euronext: AAB; NYSE: ABN) last year and on credit write downs.

Additionally, commercial-property lender Hypo Real Estate (FWB: HRX) received a €35 billion loan guarantee in order to avoid bankruptcy.

Also hurting the pound was new data showing that UK mortgage approvals were down again in August as just 32,000 loans were approved for home purchases, 1,000 fewer than were approved in July, while UK house prices also fell again in September.

At just before noon in New York, the pound was worth $1.8060 and it took ¥189.5809 to buy a pound while it took $1.4403 or ¥151.1883 to buy a euro.

The bailouts pushed sentiment toward expectations that both the European Central Bank and the Bank of England will have to cut interest rates sooner rather than later.

Both the Australia and New Zealand dollars weakened versus the dollar and the yen after US legislators agreed on a bailout package to be presented to the full US House of Representatives and Senate, with a House vote coming as soon as this afternoon in Washington, DC.

It took 82.51 cents US to buy an Australian dollar and 72.53 cents US to buy a New Zealand dollar, while the yen traded at ¥85.4876 to the Aussie and at ¥71.390 to the kiwi.

The yen was stronger in relation to several currencies Friday as investors backed away from risky currency trades on the inability of US legislators to reach an agreement on a bailout plan for the US financial sector and on the failure of US savings and loan Washington Mutual (NYSE: WM).

Washington Mutual was taken over by government regulators then sold to JPMorgan Chase (NYSE: JPM; TYO: 8634) for $1.9 billion after WaMu became the biggest bank to fail in United States history.

In late morning trade in New York, the yen had lost some of its gains versus the US dollar, trading at ¥106.1 to the greenback while it traded at ¥154.7945 to the euro, at ¥57.287 to the Brazilian real and at ¥87.9145 versus the Australian dollar.

Meanwhile, the dollar traded at $1.4589 to the euro.

The dollar was hurt not only by the WaMu failure and by the stall-out in negotiations over the bailout plan, but on increasing chances that the Federal Reserve will cut US interest rates in October and by new data from the Commerce Department that showed the US economy growing at a rate of only 2.8 percent in the second quarter rather than at the 3.3 percent rate that had been estimated earlier.

The pound was slightly stronger in relation to the greenback and the euro, with the pound trading at 79.28p to the euro at just about noon in New York, while it took $1.8405 to buy a pound.

The pound gained on the US dollar, the euro and the yen Thursday after a Bank of England official said that the Bank needs to keep inflation as its main focus when deciding policy after new data showed that UK inflation was up to 4.7 percent in August.

In morning trade in New York, the pound traded at 79.32p to the euro while it took $1.8482 to buy a pound and the yen was at ¥196.4957 to the UK currency.

The Swiss franc also strengthened versus the greenback and the euro as investors were attracted to the currency that has long been considered a safe haven in times of economic uncertainty on concerns about the outcome of negotiations over the US government’s plan to bail out its financial sector.

At nearly 11 a.m. in New York, the Swiss franc traded at SFr1.0854 to the US dollar and at SFr1.5913 to the shared currency.

The Canadian dollar also gained on its US counterpart on concerns that an agreement between the Bush administration and Congress on the bailout plan could be delayed, with the loonie trading recently at C$1.0353 to the greenback.

The US dollar was also hurt by growing sentiment that the Federal Reserve will cut interest rates when it meets next in October.

The Japanese yen was weaker Wednesday versus the euro and the dollar after investor interest in risky currency trades returned on a move by the US Federal Reserve to make more cash available to some central banks in order to stimulate lending and after Berkshire Hathaway (NYSE: BRK.A, BRK.B), Warren Buffett’s holding company, said it will buy $5 billion worth of Goldman Sachs (NYSE: GS) and will also get rights to buy that much more in the company in the next five years as part of the deal.

Meanwhile, the US dollar declined versus the euro on the Fed offer of $30 billion to central banks in Norway, Sweden, Denmark and Australia, as well as on the increased chance that the Fed will cut US interest rates next month and on resistance in Congress to the Bush administration’s plan to buy up bad debts from banks.

The dollar was also hurt by a report from the National Association of Realtors that showed sales of existing homes in the US down 2.2 percent in August while the median price for an existing home dropped 9.5 percent to $203,100.

In late morning trade in New York, the yen traded at ¥155.5411 to the euro and at ¥106.005 to the greenback while it was at ¥88.8110 to the Australian dollar and at ¥72.669 to the New Zealand currency.

The Brazilian real gained on the greenback after the Berkshire Hathaway deal with Goldman Sachs revived interest in carry trades, trading at R$1.8290 to the dollar.

The South African rand also saw gains after Finance Minister Trevor Manuel, who resigned yesterday along with other members of the government after President Thabo Mbeki was forced to quit over the weekend, said he was willing to return to his post in a new government.

Mr. Manuel has been South Africa’s finance minister for 12 years.

At late morning in New York, the rand traded at R8.1395 to the US dollar while it was at R11.946 to the euro and at R15.079 to the British pound.

The US dollar gained on the euro on Tuesday in late morning trade in New York as investors decided that Monday’s 2.1 percent decline for the greenback against the shared currency was too big to hold.

The dollar’s fall Monday came on concerns that the US plan to spend up to $700 billion buying bad debts from banks will send the already-high US budget deficit even higher.

The day’s gains came as Federal Reserve Chairman Ben Bernanke and US Treasury Secretary Henry Paulson testified about the bailout plan before the Senate Banking Committee.

At last report, the dollar was trading at $1.4726 to the euro while it took ¥105.67 to buy a dollar.

Meanwhile, the South African rand weakened versus the dollar after more resignations, including that of Finance Minister Trevor Manuel, after the forced resignation of South African president Thabo Mbeki.

Mr. Manuel’s resignation was not expected and was seen as bad news for sentiment among foreign investors, as it raised concerns about future economic policy in South Africa.

In late morning trade in New York the rand was at R8.1635 to the greenback.

The Canadian dollar was stronger for the fourth session in a row on new data showing that core inflation was up to 1.7 percent in August, with the loonie trading at C$1.0357 to its US counterpart.

The US dollar was weaker Monday on fears that the government’s plan to buy $700 in bad debt from banks will increase the nation’s already-soaring deficit.

Some forecasts have the debt ceiling reaching as high as $11.315 trillon due to the plan.

The greenback was also hurt by predictions that new data due later in the week will show that sales of both new and existing homes fell again in August.

In addition, durable goods orders are widely expected to be reported lower for last month.

At late morning in New York, the dollar traded at $1.4683 to the euro while it took ¥106.4450 to buy a dollar.

The yen gained on the Australia and New Zealand dollars as carry trades became less popular, with the Japanese currency trading at ¥89.8502 to the Aussie and at ¥73.807 to the New Zealand currency.

The South African rand weakened in relation to the greenback and the euro after the resignation of the president there, which is likely to mean the selling of South African assets by foreign investors.

In late morning trade in New York the rand was at R7.9675 to the US dollar and at R11.695 to the euro.