The dollar fell to its lowest level in almost two months as U.S. economic reports added to speculation that last quarter’s sluggish growth may persist.
The greenback fell against most of its major peers before a report April 29 that is forecast to show the American economy grew at its slowest pace in a year. An index of services-sector activity in April slumped for the first time since December, indicating the uneven economic growth continued beyond the first quarter, eroding the scope for the Federal Reserve to raise interest rates for the first time since 2006.
“You’ve seen a big move and that move might have been too far, too fast based on where the actual data was,” said Christopher Gannatti, the New York-based associate director of research at Wisdomtree Investments Inc., referring to the dollar. “If it’s just a little bit weak, and weak relative to expectations, but still ahead of the global market, we don’t think that’s reason to be concerned.”
The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, lost 0.2 percent to 1,178.46 as of 5 p.m. in New York, its lowest close since March 3.
The euro rose 0.2 percent to $1.0891, while the yen pared losses after Fitch Ratings Ltd. downgraded Japan by one level A from A+ to trade little changed at 119.04 per dollar.
U.S. data releases from manufacturing to jobless claims have trailed analysts’ estimates this month. The American economy likely expanded 1 percent in the three months through March 31, the slowest since the same period last year, according to the median estimate of 78 analysts surveyed by Bloomberg News.
Policy makers have said they’ll scrutinize incoming reports as they debate higher borrowing costs. Officials conclude a two-day meeting April 29.
“I don’t see this trend reversing, where the Fed is not going to tighten,” said Dennis Rhee, a New York-based managing member of Treesdale Partners LLC, which has about $130 million under management. “If we have three to six months of lackluster numbers, they might delay it again, but I don’t see it as a turning point at this level.”
The euro erased losses versus the dollar as Greece stepped up efforts to reach an accord with creditors in time to avert a default.
The nation removed day-to-day responsibility for seeking the agreement from Finance Minister Yanis Varoufakis, after euro-area finance ministers last week pilloried his approach to bailout negotiations. Greek bonds rallied with Spanish and Italian bonds amid optimism a revised approach may lead to a breakthrough.
“We won’t get an agreement until the 11th hour,” Kevin Hebner, a foreign-exchange strategist at JPMorgan Chase & Co. in New York, said by phone. “The bulk of the compromise comes from the Greek side. If we’re wrong and there is a Grexit, that’ll certainly hurt the euro, at least in the short term,” he said, referring to the possibility of Greece leaving the currency bloc.