The euro climbed for a sixth day against the dollar, its longest winning streak since December 2013, on signs Europe’s economy is improving as U.S. growth slows.
The 19-nation shared currency strengthened versus all its major peers as a report showed consumer prices ended four months of declines and yields on German bonds increased for a second day, adding to their allure. A gauge of the dollar fluctuated near a two-month low reached after a U.S. growth report trailed forecasts Wednesday as the Federal Reserve considers when to raise interest rates.
“We’re getting the first reaction in the market to the better economic data, which is to buy the euro,” said Steven Englander, global head of Group of 10 currency strategy at Citigroup Inc. in New York. Looking ahead, “it’s more likely that the U.S. economic data will rebound more definitively than we see a rebound in underlying European inflation.”
The euro rose 0.9 percent at $1.1224 at 5 p.m. in New York, the highest level since Feb. 25. It gained 1.2 percent to 133.99 yen.
The Bloomberg Dollar Spot Index, a measure of the U.S. currency against 10 major peers closed little changed from Wednesday, when it reached its lowest level since Feb. 6. It fell for the first month since June.
Investors who lifted bets against the euro to the highest since at least 1999 last month are staggering from the one-two blow of an improving European outlook and deteriorating economic performance in the U.S.
“People are just taking this opportunity to reverse some of their positions,” said Phyllis Papadavid, a senior foreign-exchange strategist at BNP Paribas SA in London. Buyers are “entering into long positions with the expectation we might see a bump up higher to the next key level which is the 100-day moving average at $1.1308.”
The median estimate of 60 economists still calls for the euro to fall to $1.04 by year-end.
German government bonds declined Thursday, extending a selloff from Wednesday that wiped about 55 billion euros ($62 billion) off the value of euro-area debt.
Euro-area inflation was unchanged in April from a year earlier after falling 0.1 percent in March, the European Union’s statistics office in Luxembourg said Thursday. A U.S. growth report by contrast missed forecasts, showing the economy expanded at its slowest pace in a year in the first quarter. The Federal Reserve said “transitory” factors are partly responsible after its meeting Wednesday.
“The chances for surprises for growth in Europe are stronger than the U.S. at this point,” Matthew Whitbread, a Boston-based investment manager at Baring Asset Management, said by phone. “Over the next three months or so, we think the euro could strengthen a bit versus the dollar, but beyond that three-month window, it’s likely that the dollar rally will continue.”
Barings, which has more than $40 billion of assets under management, has trimmed its bets against the euro, Whitbread said.
Reports Thursday showed personal income stagnated in March and spending grew less than forecast, even as jobless claims decreased to the lowest level in 15 years.
While the greenback is the best-performing currency during the past year, gaining 17 percent, according to Bloomberg Correlation-Weighted Indexes, it has underperformed in the last month.
“Dollar bulls are becoming frustrated with the lack of continuation in the trend, and they’re getting little support from the Fed,” said Paresh Upadhyaya, the Boston-based director of currency strategy at Pioneer Investment Management Inc., which oversees about $244 billion. “There is a growing number that feel the odds are diminishing for two hikes.”
(An previous version was corrected for the company name in 11th paragraph.)