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By Bloomberg

The euro declined for a fifth day against the dollar, approaching the weakest level since 2003, as services growth in the region fell short of analysts’ estimates, highlighting economic divergence with the U.S.

Europe’s common currency extended its drop before a European Central Bank policy meeting on Thursday, at which officials may give details of their expanded bond-buying program known as quantitative easing. The dollar advanced before a private report today that analysts said will show the world’s largest economy added jobs at a faster pace in February.

“It’s worth noting that the market may want to increase their short-euro exposure ahead of the ECB actually starting their QE program,” said Sam Lynton-Brown, a currency strategist at BNP Paribas SA in London. “While the announcement led to euro weakness, we also think the flow impact of QE is going to be very important.” A short position is a bet that the price of an asset will decrease.

The euro weakened 0.4 percent to $1.1129 at 7:08 a.m. New York time. It fell to $1.1098 on Jan. 26, the weakest level since September 2003. The common currency slid 0.5 percent to 133.10 yen, adding to a drop of 0.4 percent from Tuesday. The dollar was little changed at 119.61 yen.

PMIs Falter

A purchasing managers index for services industries in the euro area was 53.7 in February, compared with the 53.9 estimate, Markit Economics confirmed. Earlier releases showed the sector in Spain grew at a slower pace than predicted. Italy’s was at the 50 level that marks the difference between contraction and expansion, and compared with the median prediction of 51.4.

The 19-nation shared currency has declined 2.1 percent against the dollar since Jan. 22, when ECB President Mario Draghi unveiled a 1.1 trillion-euro bond-buying plan and pledged to buy securities until there’s a “sustained adjustment” in inflation. The euro fell to an 11-year low that month as gains by bond prices pushed yields across the region, with the exception of Greece, to record lows.

In contrast, the Federal Reserve is standing out as it prepares to raise borrowing costs. With India becoming the latest central bank to increase stimulus, figures from the Roseland, New Jersey-based ADP Research Institute will show a 219,000 increase in employment last month, after a gain of 213,000 in January, according to the median projection of economists surveyed by Bloomberg.

Dollar Index

Bloomberg’s Dollar Spot Index, a gauge of the currency versus 10 major peers, gained 0.2 percent to 1,177.39, headed for the highest closing level in data going back to 2004.

The odds of a Fed interest-rate increase by the policy makers’ December meeting was about 77 percent, according to futures data. The target for the federal funds rate has been at virtually zero since 2008 to support the economic recovery.

“There would have to be significant downside surprises to U.S. data in order to push expectations for the first Fed rate hike beyond 2015 into 2016,” said BNP’s Lynton-Brown, who sees the dollar appreciating to $1.05 by year-end. “We continue to expect the first hike to come in September.”

Reserve Bank of India Governor Raghuram Rajan cut the benchmark repurchase rate to 7.5 percent Wednesday from 7.75 percent. That’s less than a week after Prime Minister Narendra Modi’s government pushed back its fiscal-deficit target in the federal budget to spur economic growth.

The RBI acted due to weakness in the economy and after it agreed upon a formal inflation target with the government, Rajan said in a statement. He last cut the rate on Jan. 15.

The rupee weakened 0.6 percent to 62.2625 per dollar. India’s currency has gained 1.2 percent against the dollar this year, one of four major currencies to rise against the greenback among 31 monitored by Bloomberg.