The dollar slid to a two-year low versus the euro as weaker-than-forecast economic data and concern that U.S. growth was hurt by a government shutdown added to bets the Federal Reserve will delay slowing stimulus until next year.
The greenback headed for its second weekly losses against the European currency and the yen as more Americans than forecast filed jobless-benefit claims and a private index of manufacturing fell from last month. DBRS Inc. said the U.S.’s AAA rating remained under review “with negative implications.” The Czech koruna rallied as confidence in the nation rose.
The “market is turning quite positive euro,” said Masafumi Takada, a director at BNP Paribas SA in New York. The 17-nation currency is gaining on “the back of U.S. downgrade fear, a weaker U.S. number, Fed tapering postponed.”
The dollar lost 0.2 percent to $1.3801 per euro at 5 p.m. New York time and reached $1.3825, the weakest since November 2011. It fell 0.1 percent to 97.28 yen after touching 97.16 yesterday, the lowest since Oct. 9. Europe’s shared currency gained 0.1 percent to 134.26 yen after rising as much as 0.5 percent earlier and weakening 0.2 percent.
A gauge of price swings among Group of Seven nations’ currencies touched a 10-month low. JPMorgan Chase & Co.’s G-7 FX Volatility Index reached 7.5 percent, the lowest intraday level since Dec. 21. The gauge was at 10.2 percent on Sept. 3.
The Czech koruna rose against all of its 31 most-traded peers as a national gauge of confidence increased to the highest since October 2011. The currency rallied 0.7 percent versus the dollar to 18.6295 and reached 18.6075, the strongest since Feb. 7. The koruna gained 0.5 percent to 25.709 per euro.
Brazil’s real fell versus most major counterparts on speculation the nation’s central bank will limit rollovers of foreign-exchange swaps that have supported a two-month rally. The currency depreciated 0.6 percent to 2.2033 per dollar.
The euro briefly reversed gains after an index based on a survey of purchasing managers in the euro-area manufacturing and services industry dropped to 51.5 from 52.2 in September, London-based Markit Economics said. A Bloomberg survey forecast 52.4. A reading above 50 indicates expansion.
“This data is a wake-up call, showing that there are events that can still knock the euro,” said Jane Foley, a senior currency strategist at Rabobank International in London.
Europe’s shared currency may have gained too much, too fast against the greenback, a technical indicator signaled for a third straight day. The euro’s 14-day relative strength index reached 74, above the 70 level some traders see as a sign a drop may be imminent. The gauge rose above the 70 level on Oct. 22.
The partial U.S. government shutdown that began Oct. 1 amid a political deadlock in Washington over spending and the debt ceiling probably trimmed 0.25 percentage point from fourth-quarter economic growth and cost 120,000 jobs in October, President Barack Obama’s chief economic adviser said on Oct. 22.
DBRS said in an e-mailed statement it’s continuing to study the U.S.’s top rating, even after a deal ended the shutdown last week and pushed fiscal deadlines into 2014. The Toronto-based ratings company put the ranking on review Oct. 9.
Initial jobless claims in the U.S. decreased by 12,000 to 350,000 in the week ended Oct. 19 from a revised 362,000 in the prior period, a Labor Department report showed today. A Bloomberg forecast a decline to 340,000. Applications in California remained elevated and analysts weren’t able to determine how many non-federal workers filed due to the government shutdown, a Labor Department spokesman said.
The Markit Economics preliminary index of U.S. manufacturing fell to 51.1 in October from 52.8 at the end of the previous month, the group said. A Bloomberg survey forecast a decline to 52.5.
The Fed will delay tapering its $85 billion of monthly bond purchases until March, according to the median estimate of 40 economists surveyed by Bloomberg on Oct. 17-18. The central bank buys Treasuries and mortgage-backed securities to put downward pressure on long-term yields and spur growth, a move that tends to debase the greenback.
“While the Fed’s on hold and still pumping liquidity in, the dollar’s going to be soft against everything,” said Jeremy Hale, head of macro strategy at Citigroup Inc. in London. “There’s a feeling that the debacle in Congress damaged the economy a little bit.”
The dollar slid 1.3 percent in the past month, making it the second-worst performer, after the Canadian dollar at 2.4 percent, among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro strengthened 1 percent, while the yen was little changed.
Norway’s krone climbed to the highest in a month versus the dollar after the nation’s central bank said the currency weakened since policy makers last met. After gaining versus the euro in 2011 and 2012, the krone lost 11 percent this year following warnings the bank was ready to act to stem gains.
The krone appreciated 0.3 percent to 8.1325 per euro and advanced 0.5 percent to 5.8923 per dollar. It reached 5.8797 to the greenback, the strongest since Sept. 20.
Trading in over-the-counter foreign-exchange options totaled $48 billion, versus $51 billion yesterday, according to data reported by U.S. banks to the Depository Trust Clearing Corp. and monitored by Bloomberg. Volume in options on the euro-dollar exchange rate amounted to $11.7 billion, the largest share of trades at 24 percent. Options on the dollar-yen rate totaled $9.3 billion, or 19 percent.
Euro-dollar options trading was 70 percent more than the average for the past five Thursdays at a similar time in the day, according to Bloomberg analysis. Dollar-yen options trading was 21 percent above average.
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