The dollar tumbled, extending its longest streak of losses since August 2013, as signs of dimming economic growth threaten the Federal Reserve’s path to higher rates.
The greenback continued to unwind the strongest start to the year in at least a decade as a report showing the slowest economic expansion in a year cast a pall over policy makers’ meeting in Washington. Traders who pushed the dollar to its highest in a decade are paring those wagers as the U.S. currency heads for its first monthly loss since June.
“The outlook for the dollar is perhaps not as bright as many of the bulls think,” said Andrew Wilkinson, chief market analyst at Interactive Brokers LLC in Greenwich, Connecticut. “While I agree the Fed is likely to start the journey of normalizing interest rates, I think it’s going to take a lot longer than people ever expected.”
The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, declined 0.9 percent to 1,160.47 as of 12:25 p.m. in New York. It fell for a six day, the longest streak since August 2013 and reached the weakest level since Feb. 5 on a closing basis.
The greenback’s losses were led by a 2.5 percent drop against the Swedish krona and a 2.3 percent loss versus Norway’s krone. It fell 1.7 percent to $1.1169 per euro, its weakest in almost two months. The U.S. currency was little changed at 118.84 yen.
The yen has gained 0.8 percent versus the greenback this year, after sliding 12 percent in 2014. The euro, which has fallen for nine consecutive months is poised to rally 4 percent this month. That would be its biggest gain since in four years.
U.S. Treasuries yields versus their European counterparts, narrowed Wednesday. German bund tumbled as DoubleLine Capital’s Jeffrey Gundlach said he’s considering making an amplified bet against Germany’s debt, while Janus Capital’s Bill Gross, has said bunds were the “short of a lifetime.”
“The move up in the dollar is stalled, correcting and you need patience,” Kit Juckes, a global strategist at Societe Generale SA, said in an interview on Bloomberg Television’s “On The Move” with Jonathan Ferro. “The next move needs to come from the Fed for the dollar.”
The central bank is monitoring economic data as it looks to raise interest rates for the first time since 2006. The economy barely grew in the first three months of the year, a report showed today, hindered by slumps in business investment and exports after oil prices plunged and the dollar surged.
“We’re going to continue to get squeezed” until the data improves, said Matt Derr, a foreign-exchange strategist at Credit Suisse Group AG in New York. “There’s really been nothing that suggests there’s that imminent rebound in Q2. People are hanging on to the hope that the Fed sees something that we don’t.”
The Federal Open Market Committee last month attributed sluggish price increases and a softening in spending to “transitory” factors, such as declines in the price of oil and cold winter weather, minutes from its March 18 meeting show. Officials release their next statement at 2 p.m. in New York Wednesday.
Gross domestic product grew at a 0.2 percent annual pace in the first quarter, down from 2.2 percent for the period through December, Commerce Department data showed Wednesday in Washington. The median estimate of analysts surveyed by Bloomberg before the release called for 1 percent.
“It was a disappointing number and the dollar is weaker,” Eric Viloria, a strategist at Wells Fargo & Co. in New York, said by phone. “It does create a little more uncertainty and it does restrain the dollar a little bit.”