Dollar Falls From 1-Month High Before Durable Goods

The dollar weakened from a one-month high against its major peers reached last week before a report forecast to show U.S. durable goods orders dropped in April.

The euro headed for the biggest monthly drop since January versus the U.S. currency after European Central Bank President Mario Draghi signaled yesterday that policy makers are ready to expand stimulus. South Africa’s rand slipped to the weakest level in almost a week as a report showed gross domestic product contracted for the first time since 2009 in the first quarter. The yen was little changed before Bank of Japan Governor Haruhiko Kuroda speaks at a conference tomorrow.

“Dollar is continuing to trade weakly,” said Peter Kinsella, a senior foreign-exchange strategist at Commerzbank AG in London. “We’re still some distance away from rate hikes.”

The Bloomberg Dollar Spot Index was little changed at 1,010.83 at 7:09 a.m. New York time. The gauge, which tracks the greenback against the performance of a basket of 10 major currencies, rose to 1,012.43 on May 23, the most since April 24.

The dollar was at 101.94 yen after appreciating yesterday to 102.05, the strongest level since May 15. The euro was at $1.3648. It has declined 1.6 percent versus the dollar this month, set for the biggest drop since depreciating by 1.9 percent in January. The 18-nation common currency was little changed at 139.11 yen.

Durable Goods

The Commerce Department will say today bookings for goods meant to last at least three years fell 0.7 percent in April after climbing 2.5 percent the previous month, according to the median estimate of economists surveyed by Bloomberg News.

Federal Reserve Chair Janet Yellen emphasized this month the U.S. economy is falling short of the central bank’s goals and still needs help, easing concern policy makers are preparing to raise rates. The U.S. has further to go to achieve full health, Yellen said.

“Until the Fed puts in new forecasts that suggest inflation is going to be higher, unemployment lower and growth is going to be ticking along nicely, the market is going to presume the Fed policy is unchanging,” said Neil Mellor, a London-based currency strategist at Bank of New York Mellon. “That is going to provide the backdrop for dollar weakness.”

Rand Weakens

South Africa’s economy shrank by an annualized 0.6 percent in the first quarter, after expanding 3.8 percent in the previous three months, the statistics office said. The median estimate of analysts in a Bloomberg survey was for a contraction of 0.2 percent.

The rand slid 0.8 percent to 10.4366 per dollar after depreciating to 10.4570, the weakest level since May 21.

Draghi is scheduled to take part in a discussion today at an ECB conference in Sintra, Portugal.

“What we need to be particularly watchful for at the moment is, in my view, the potential for a negative spiral to take hold between low inflation, falling inflation expectations and credit, in particular in stressed countries,” Draghi said yesterday in a speech at the event.

The euro may break through support at $1.3450 and approach $1.30 over the next six months, said Thomas Averill, a managing director in Sydney at Rochford Capital, a currency and rates risk-management company.

“I’m fairly bearish on the euro,” Averill said. “The ECB is, certainly from the rhetoric perspective, leaning towards easing.”

Kuroda will speak in Tokyo at a conference hosted by the BOJ and the Institute for Monetary and Economic Studies. BOJ Deputy Governor Kikuo Iwata said yesterday that raising Japan’s potential growth rate further can’t be done through monetary policy and is a task for the government. Central bank officials maintained unprecedented stimulus last week.

“The dollar’s next level of target would be 102.30 to 102.35 yen,” near the May 13 high of 102.36, said Junichi Ishikawa, an analyst at IG Markets Securities Ltd. in Tokyo.

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