The dollar touched the lowest in more than a week versus the euro before the Federal Reserve begins a two-day meeting amid bets it will maintain its quantitative easing bond purchases for the foreseeable future.
The greenback is set for its first monthly drop since January ahead of a U.S. report tomorrow forecast to show private employers added the fewest jobs in six months. The yen is set to complete a seventh monthly decline as an advance in Asian equities boosted demand for higher-yielding assets. New Zealand’s dollar slid versus its Australian counterpart after data showed home-building approvals in the smaller nation unexpectedly decreased last month.
“The dollar is being sold with weakening U.S. economic indicators and talk of prolonged quantitative easing,” said Yasuhiro Kaizaki, the vice president of global markets at Sumitomo Mitsui Trust Bank Ltd. in New York. “The Fed may become a little bit more cautious about its assessment on the economy.”
The greenback lost 0.1 percent to $1.3111 per euro as of 6:51 a.m. in London after touching $1.3121, the weakest since April 19. It has fallen 2.2 percent this month. The yen was little changed at 97.79 per U.S. currency, having dropped 3.8 percent since the end of March. It slid 0.1 percent to 128.18 per euro, set for a 5.8 percent decline in April.
The yen’s seven months of slides against the dollar will match the stretch that ended in March 2001 as the longest since a nine-month losing streak that was completed in January 1996.
The Fed is buying $85 billion of bonds each month in its third round of QE to put downward pressure on borrowing costs. While Chairman Ben S. Bernanke said after the previous meeting on March 20 that further labor-market gains were needed to consider reducing monetary easing, minutes showed officials discussed slowing the pace of buying.
Private employment rose by 150,000 in April after gaining 158,000 the previous month, data from the Roseland, New Jersey- based ADP Research Institute will probably show tomorrow, according to the median estimate of economists surveyed by Bloomberg News. U.S. payrolls increased by 150,000 workers after an 88,000 gain in March, a separate survey forecasts before a May 3 Labor Department report.
So far this year, the dollar has climbed 0.6 percent versus the euro and 13 percent against the yen. The Asian nation’s currency has slumped 11 percent versus the euro, as unprecedented stimulus measures announced by the Bank of Japan on April 4 spurred investors to sell the yen.
Japanese industrial output grew less than estimated, bolstering the case for continued BOJ action. Data from the trade ministry today showed production climbed 0.2 percent in March, less than the median 0.4 percent forecast in a Bloomberg survey.
Demand for the yen was sapped as the MSCI Asia Pacific Index of stocks rose 0.9 percent.
“With very few risk-off catalysts, yen buying is unlikely to prevail in the market,” said Marito Ueda, the senior managing director at FX Prime Corp. (8711), a currency-margin company in Tokyo. “Yen weakness will stay here as a trend” amid the BOJ’s monetary easing, he said.
New Zealand’s currency, nicknamed the kiwi, slid against most major peers after the statistics bureau said home building approvals fell 9.1 percent in March compared with the median forecast for an increase of 2 percent.
The “unambiguously weaker-than-expected” data spurred selling of the New Zealand dollar versus Australia’s currency, said Mike Jones, a foreign-exchange strategist at Bank of New Zealand in Wellington.
The kiwi weakened 0.2 percent to NZ$1.2102 per Australian dollar and was little changed at 85.66 U.S. cents.
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