Dollar Trades Near Five-Month Low on Concern Fed Will Ease Policy Further
The dollar traded near a five-month low versus the euro on speculation the Federal Reserve will ease monetary policy further amid signs the U.S. recovery is slowing.
The Dollar Index was near an eight-month low before U.S. reports forecast to show declines in economic activity and consumer confidence. The euro traded near an eight-week high against the yen before a German report tomorrow that may show sentiment rose for a fourth month.
“There’s ongoing speculation that we will see further quantitative easing from the Fed,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “We will see the U.S. dollar remain on the back foot.”
The dollar was at $1.3476 per euro as of 9:32 a.m. in Tokyo from $1.3492 on Sept. 24. The dollar earlier touched $1.3495 per euro, matching the lowest level since April 20. The greenback traded at 84.35 yen from 84.21 yen. It reached 84.12 yen on Sept. 24, the lowest since Sept. 15. The European currency was at 113.67 yen from 113.62 yen on Sept. 24, after earlier rising to 113.97, the highest level since Aug. 3.
The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners including the euro, yen and pound, was at 79.34 after touching 79.26, the lowest since Feb. 3.
U.S. Outlook
The U.S. national activity index declined to minus 0.5 in August from zero in July, according to the median estimate of economists in a Bloomberg News survey before the Fed Bank of Chicago releases the data today. A reading below zero indicates below-trend-growth in the economy.
The Conference Board’s U.S. consumer confidence index fell to 52.3 this month from 53.5 in August, according another survey before the New York-based research group’s data tomorrow.
The Federal Open Market Committee said in a statement last week it "will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery."
The euro headed for a 6.5 percent gain this month against the yen. A German consumer sentiment index will rise to 4.2 in October from 4.1 in September, according to a Bloomberg News survey of economists before GfK AG’s report tomorrow. That would follow an Ifo institute report last week that its German business-climate index climbed to a two-year high in August.
‘Doing Better’
“Europe’s economy appears to be doing better,” said Yuji Saito, director of the foreign-exchange department at Credit Agricole Corporate and Investment Bank in Tokyo. “The bias is for the euro to be bought.”
Futures traders reversed bets that the euro will decline against the dollar, the first time since December 2009 that there are long positions in the shared currency, data from the Commodity Futures Trading Commission showed on Sept. 24.
The difference in the number of wagers by hedge funds and other large speculators on an advance in the euro compared with those on a drop -- so-called net longs -- was 5,097 on Sept. 21 compared with net shorts of 9,644 a week earlier. A long position is a bet that an asset’s price will increase.
Japan’s exports grew at the slowest pace this year amid a decrease in global demand and an advance in the yen, Ministry of Finance data showed today. Overseas shipments increased 15.8 percent in August from a year earlier, compared with the median economist estimate of 19 percent in a Bloomberg survey.
To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.
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