Dollar Falls as Signs of Uneven Recovery Damp Fed Bets

The dollar fell against most of its major peers as signals of an uneven economic recovery damped speculation the Federal Reserve will raise interest rates by mid-2015.

The yen gained earlier versus the dollar as the U.S. said it conducted its first airstrikes in Syria, boosting demand for the safest assets. A Bloomberg gauge of the dollar retreated for the first time in three days as data showed U.S. home prices rose less than forecast in July, the second report in two days showing a weaker-than-forecast housing market.

“We’ve had a little bit of setback in growth expectations and Fed-action expectations in the U.S.,” Greg Anderson, head of global foreign-exchange strategy in New York at Bank of Montreal, said in a phone interview. “It has translated into foreign-exchange participants taking off their favorite trade, which is long the dollar against the world.”

The Bloomberg Dollar Spot index, which tracks the greenback against 10 major counterparts, declined 0.1 percent to 1,056.02 at 10:14 a.m. New York time, after closing yesterday at the highest level since June 2010.

The yen appreciated as much as 0.5 percent, the biggest intraday jump since Sept. 5, to 108.26 per dollar before trading little changed at 108.77. The euro gained 0.2 percent to $1.2873.

Traders saw a 43 percent chance the Fed will increase its benchmark interest-rate target to at least 0.5 percent by June, federal-funds futures trading showed. The likelihood was 48 percent on Sept. 19.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE