Dollar Weakens Against Euro on Concern U.S. Recovery Is Slowing

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The dollar fell for a third day against the euro amid concern a U.S. jobs report on Friday will add to signs the recovery in the world’s largest economy is slowing.

The greenback headed for a fourth weekly decline, its longest losing streak in more than a year, as investors sought clues on the direction of the U.S. economy and the likely timing of an interest-rate increase by the Federal Reserve. An index of the dollar versus 10 major peers held within 0.5 percent of a three-month low.

The U.S. currency dropped 0.2 percent to $1.1374 per euro as of 11:02 a.m. London time, after touching $1.1392, its weakest level since Feb. 23. Bloomberg’s Dollar Spot Index was little changed at 1,160.76.

“If the payroll numbers add to the stream of bad numbers out of the U.S., this will fuel further dollar weakness,” said Christin Tuxen, a senior analyst at Danske Bank A/S in Copenhagen. He said the dollar may drop to $1.15-$1.17 per euro in the “short term.”

Weaker-than-expected U.S. growth in the first quarter spurred investors to push back their estimates for the timing of the Fed’s first rate increase since 2006.

Bond Yields

The jump in German bund yields this month may also have weighed on the dollar by making the benchmark European debt more attractive and luring U.S. investors into euros. The single currency was also supported as German factory orders data signaled steady growth in Europe’s largest economy.

“The payrolls report will be pivotal,” said Steven Saywell, global head of foreign-exchange strategy at BNP Paribas SA in London. “The dollar’s looking cheap, and if we get a strong payroll this will be a strong catalyst to take the dollar higher.”

The Labor Department report is forecast by economists to show the U.S. added 230,000 jobs in April, with the unemployment rate dropping to 5.4 percent, the lowest in seven years.

The dollar was also depressed by Fed Chair Janet Yellen’s suggestion Wednesday that long-term interest rates may jump when the central bank raises its benchmark rate, sending U.S. stocks and bonds lower.

“Equity-market valuations at this point generally are quite high,” Yellen said in Washington. “Long-term interest rates are at very low levels. We could see a sharp jump in long-term rates” after lift-off, she said.

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