Dollar Drops to 3-Week Low as Jobs, Home Sales Damp U.S. OutlookLananh Nguyen
The dollar reached the lowest level in almost three weeks versus major peers as rising U.S. jobless claims and weak housing data cast doubt on the nation’s economic outlook.
The greenback weakened after a report showed applications for unemployment benefits rose last week and sales of new homes slumped, adding to evidence U.S. economic growth remains uneven. Federal Reserve policy makers want to see signs of growth and inflation on the rise before committing to the first interest-rate increase in almost a decade.
“The dollar is being driven lower by the dismal data,” David Song, a New York-based currency analyst at FXCM Inc., said by phone. “We’re still seeing some underlying weakness in labor dynamics and consumption right now.”
The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, fell 0.6 percent to 1,184.57 at 5 p.m. in New York, the lowest since April 3. The dollar declined 0.9 percent to $1.0824 per euro, snapping a three-day gain, and slid 0.3 percent to 119.58 yen.
The greenback gauge has slumped 1.3 percent in April after gaining for the past nine months.
“Any kind of underperformance in the labor market and the dollar is just going to overreact,” Eimear Daly, a currency strategist at Standard Chartered Plc, said by phone from London. “It’s concerning some people that maybe we’ve had so much outperformance in the labor market and underperformance in the economy.”
Applications for U.S. unemployment benefits increased by 1,000 to 295,000 in the week ended April 18, a Labor Department report showed. The median forecast of 55 economists surveyed by Bloomberg called for 287,000.
The data were “disappointing,” said Camilla Sutton, Toronto-based head of currency strategy at Bank of Nova Scotia. “All the stars that had aligned for a strong U.S. dollar have shifted a little bit and we have a more balanced outlook.”
The dollar extended losses after Commerce Department data showed purchases of new U.S. homes slumped more than forecast in March from a seven-year high, a sign progress in the industry will be halting.
The Fed has ruled out raising interest rates when it next meets April 28-29. Policy makers have left the door open to move in June.
“The dollar rally is on pause as the market awaits more insight from the Fed,” Lennon Sweeting, a Toronto-based dealer at the broker and payment provider USForex Inc., said by phone.
The currency also dropped against the euro after Greek Prime Minister Alexis Tsipras urged an acceleration of talks with the country’s creditors to make a deal by the end of this month during a meeting with German Chancellor Angela Merkel.
Negotiations on Friday will shift to Riga, Latvia, where euro-area finance ministers will attempt to persuade Greece to commit to economic reforms so that aid payments can be released before the country runs out of money.