Dollar Falls for First Time in 3 Days on Consumer Sentiment Drop

  • Greenback pares monthly gain even as GDP growth revised up
  • Investors sell U.S. currency before November payrolls report

The dollar fell for the first time in three days after data showed consumer confidence unexpectedly declined in November to the lowest level in more than a year.

The U.S. currency weakened against most of its major peers as investors look past the Thanksgiving holiday week for fresh evidence that the Federal Reserve is ready to raise interest rates in December. Fed Chair Janet Yellen will speak Dec. 2, before a European Central Bank meeting and U.S. payroll report on the same week. The yen rose after Turkey shot down a Russian warplane near the Syrian border, boosting demand for the safest assets.

"We’re in a little bit of a holding pattern, waiting for the ECB next week and payrolls that seem to be the really big things," said Matt Derr, a foreign-exchange strategist in New York at Credit Suisse Group AG. "People are looking ahead to next week and beyond and right now there isn’t a lot" moving the market.

The Bloomberg Dollar Spot Index, which tracks the currency versus 10 major peers, fell 0.3 percent to 1,230.44 at 5 p.m. in New York. The gauge has rallied 1.7 percent in November, set for the biggest monthly advance since July. The U.S. currency lost 0.1 percent to $1.0643 per euro and declined 0.3 percent to 122.53 yen.

The Conference Board’s confidence index slumped to 90.4, the lowest since September 2014, from a revised October reading of 99.1, the New York-based private research group said. The dollar remained weaker after official data showed the U.S. economy grew at a 2.1 percent annualized rate last quarter, up from an initial estimate of 1.5 percent, Commerce Department figures showed.

Futures indicated a 74 percent chance of the U.S. central bank raising its benchmark rate at its next meeting, data compiled by Bloomberg show. That’s up from 50 percent odds at the end of October. The calculation assumes the effective fed funds rate averages 0.375 percent after the first increase, compared with the current zero to 0.25 percent target range.

“There does seem to be a limit to dollar hawkishness,” said Jane Foley, a senior currency strategist at Rabobank International in London. “The market is focused on the trajectory of Fed interest-rate hikes. The perception that maybe the Fed aren’t going to be hiking aggressively has limited downside on euro-dollar.”

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