Dollar Slides on Signs of Slowing Economic Growth; Ruble GainsAndrea Wong and Rachel Evans
The dollar declined from a more than decade-high after U.S. durable-goods orders unexpectedly decreased in December for a fourth month and Federal Reserve policy makers began a two-day meeting.
The greenback fell against most major counterparts as lower-than-forecast corporate results suggested a slowing global economy may be impinging on U.S. growth. Traders are betting on an October increase in interest rates by Fed Chair Janet Yellen and colleagues. The euro rose after a Swiss National Bank official said it remained ready to intervene in markets. Russia’s ruble gained from a record low.
“The durable-goods report was clearly not as strong as anticipated,” said Jennifer Vail, head of fixed-income research at U.S. Bank Wealth Management, which manages $122 billion in assets. “The other item that’s probably impacting the market today and further amplifying the safe-haven trade is that we’re finally starting to see some impact to domestic earnings via the stronger dollar.”
The Bloomberg Dollar Spot Index, a gauge of the currency’s performance against 10 major peers, slid 0.6 percent to 1,154.57 at 5 p.m. New York time. It closed at 1,161.42 in New York on Jan. 26, the highest in data back to 2004.
The dollar fell 1.3 percent to $1.1381 against the euro after gaining to $1.1098 yesterday, the strongest since September 2003. It declined 0.5 percent to 117.87 yen. The shared currency appreciated 0.8 percent to 134.15 yen.
The Standard & Poor’s 500 Index of stocks fell 1.3 percent on weaker-than-forecast results from Caterpillar Inc. to Microsoft Corp.
The ruble rose from a record-low close Monday when it a plunged after Standard & Poor’s lowered Russia’s credit rating one step to BB+, putting it below investment grade for the first time in a decade.
The currency strengthened 3 percent to 66.82 versus the dollar after declining 6.6 percent on Monday, the most since Jan. 5, and closing at 68.799.
China’s yuan rose by the most in four weeks as the central bank strengthened the reference rate after the currency’s biggest two-day slide since 2008.
The yuan climbed 0.17 percent, the most since Dec. 30, to close at 6.2435 a dollar in Shanghai after dropping 0.72 percent over the previous two days, according to prices from the China Foreign Exchange Trade System.
The franc had traded near parity against the euro since the SNB sent ripples through markets on Jan. 15 by abandoning its cap of 1.20 francs per euro and increasing a charge on deposits. That pushed the Swiss currency as much as 41 percent higher against the euro to the strongest level on record.
“We’re fundamentally prepared” to intervene again, SNB Vice President Jean-Pierre Danthine said in an interview with Tages-Anzeiger newspaper published on Tuesday. The Tribune de Geneve and 24 Heures newspapers published similar comments, with Danthine telling the latter that the current euro-franc exchange rate wasn’t justified.
“Everyone is watching for the SNB, but we are still skeptical,” said Peter Rosenstreich, head of market strategy at Swissquote Bank in Gland, Switzerland. “The euro is finding buyers across the board, so this could be more of a short squeeze.”
The euro rose 1.2 percent to 1.02745 francs after appreciating as much as 2.3 percent to 1.03826, the strongest level since the SNB lifted the cap.
The dollar weakened after the 3.4 percent drop in durable goods -- items meant to last at least three years -- followed a 2.1 percent slide the prior month, data from the Commerce Department showed. The median forecast of 80 economists surveyed by Bloomberg estimated orders would rise 0.3 percent.
“Durable-goods orders specifically provoked decent pullback in the dollar across the board,” said Greg T. Moore, a senior currency strategist at Royal Bank of Canada. “December data has been mixed, and while durable orders today add to the few disappointing indicators for the month, it’s not enough to alter the Fed’s trajectory.”
The Fed is forecast to leave interest rates unchanged at the two-day policy meeting that began today, a Bloomberg News survey of economists shows. The chance of a interest-rate increase by the October meeting was 51 percent, futures data showed.
The euro has tumbled 4.1 percent this year, the second-worst performance among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes, after the European Central Bank last week announced a quantitative easing, or bond buying, plan. The yen has advanced 4.5 percent in 2015 and the U.S. dollar gained 2.6 percent.