Dollar Falls Third Week as Jobs Data Clouds U.S. Rate Outlook

The dollar slid for a third week, capping the longest streak of losses in almost a year, as a report showing cracks in the U.S. labor market threatened the outlook for interest-rate increases.

The greenback fell against all except one of its 16 major peers as American employers added fewer workers in March than in any other month since December 2013, muddying a rare bright spot in the U.S. recovery. Economic reports have lagged analyst forecasts since early January, with the Federal Reserve noting after its latest meeting that “growth has moderated somewhat.” The central bank releases minutes April 8.

“It’s just one more sign that economic growth slowed in the first quarter,” said Kate Warne, a St. Louis-based investment strategist at Edward D. Jones & Co., which manages $870 billion. “Whenever investors see a weak number they’re likely to conclude that the Fed will wait longer before raising rates.”

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, lost 0.8 percent on the week to 1,182.26, its lowest closing price in a month. Its last three-week skid came in June.

The greenback also tumbled a third week against the euro and the yen, declining 0.8 percent to $1.0976 versus the shared currency and 0.1 percent to 118.97 yen.

‘Pretty Shocking’

The Fed is weighing data for signs the U.S. economy can weather higher borrowing costs as global growth stalls.

American companies added 126,000 jobs in March, almost half the 245,000 median estimate of 98 analysts surveyed by Bloomberg News. The increase was lower than the most pessimistic forecast and followed a 264,000 gain a month earlier that was smaller than initially reported, the Labor Department said.

“It’s pretty shocking,” said John Vail, the chief global strategist at Nikko Asset Management Co., which oversees $160 billion globally. “This report obviously does push out expectations for a Fed hike to some degree, although we all know that the data can change very rapidly.”

The rate for fed funds futures for December fell four basis points to 0.34 percent, indicating about one-in-three odds of a rate increase by the Fed’s meeting that month.

Policy makers will still increase rates in August or September, according to Bill Gross, who runs the $1.5 billion Janus Global Unconstrained Bond Fund.

“They want to get off zero, if only to prove that they don’t have to stay at zero for a long, long time,” he said after the payrolls release.

Fed Minutes

Fed minutes due Wednesday may give more clarity on the central bank’s approach. At their last meeting, policy makers revised down interest-rate projections, even as they removed a commitment to being “patient” on the timing of rate increases.

The U.S. currency declined 1.8 percent after that meeting, the biggest move in six years on a closing basis. It pared gains among a basket of 10 developed market peers to 19 percent for the last 12 months, according to Bloomberg Correlation-Weighted Indexes.

“You’re getting some people reappraising the path of Fed rate increases and pushing it back,” said David Donabedian, chief investment officer in Atlanta at Atlantic Trust Private Wealth Management, which oversees $26.2 billion. “But I think as the year evolves we’re going to see that the U.S. economy does fine -- not spectacular, but solid.”

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