The dollar fell the most in a month as reports broadened evidence of a soft patch for the U.S. economy and clouded the outlook for the Federal Reserve to raise interest rates.
The U.S. currency slid as traders reassessed the extent of American out-performance versus the world on economic growth. The greenback declined versus the 19-nation currency as European Central Bank President Mario Draghi endured a confetti-throwing protester to predict the region’s recovery will “broaden and strengthen.”
“The growth side of things is not yet materializing this year to the Fed’s liking,” said David Donabedian, chief investment officer in Atlanta at Atlantic Trust Private Wealth Management, which oversees $26.2 billion. “The consensus has moved from they’re going to raise in June to they’re going to raise in September to some people saying it may be even later than that. And that’s a reason right there to sell the dollar.”
The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, slipped 1.6 percent this week, the most since the period ending March 20, to 1,185.36 in New York. The index has gained 4.8 percent this year, after increasing 11 percent in 2014.
The dollar declined 1.9 percent this week to $1.0806 per euro and 1.1 percent to 118.90 yen.
The greenback fell amid a passel of weaker-than-forecast economic data. U.S. retail sales trailed projections for a fourth-straight month, industrial production dropped, and jobless claims increased more than predicted. A release Friday that showed core inflation inched higher for a third consecutive month only halted the greenback’s losses.
Bloomberg’s index of U.S. economic surprises, which measures whether analysts over- or under-estimate, slumped to its lowest level in six years. The reports muddy the outlook for the Fed to raise interest rates for the first time since 2006.
Net bullish bets for the dollar to strengthen against eight major counterparts by hedge funds and money managers fell to the least since October, according to Commodity Futures Trading Commission data. Futures positions betting on a stronger greenback were at 329,939 contracts as of April 14.
“We’ve seen the dollar rally slow on the back of weaker growth,” Robert McAdie, the London-based head of research and strategy at BNP Paribas SA, said at a press briefing in New York on April 15. “The markets got a little too euphoric around the broad scale growth pick up in the U.S. Growth is picking up, but not picking up aggressively.”
The Canadian dollar and Norwegian krone led gains versus the U.S. currency as crude oil -- a key export of both nations - - jumped the most in more than four years. The Canadian dollar rallied 2.6 percent while the krone added 3.3 percent.
The euro advanced even as Draghi re-committed the ECB to buying bonds through September 2016 in an eventful briefing after policy makers’ latest meeting. The press conference was interrupted by a protester who jumped atop Draghi’s desk while shouting slogans.
Draghi resumed his speech after the woman was carried out, saying that the ECB’s 1.1 trillion euro ($1.2 trillion) stimulus program was proving “effective.”