Dollar Holds Longest Losing Streak Since September on Durables

  • Greenback fell versus euro, commodity currencies Thursday
  • Yen near three-week low before BOJ sets policy Friday

The dollar held its longest losing streak in four months against the euro after a report showed U.S. durable goods orders slumped in December, adding to evidence of cooling economic growth.

The currency fell against most of its major peers Thursday after the larger-than-forecast decline in durable goods sales fanned concern that the U.S. economy is slowing amid global financial-market turmoil. The report precedes data on U.S. growth Friday that will be watched with Federal Reserve policy makers linking the pace of interest-rate increases to how the U.S. economy performs. The yen was near a three-week low before the Bank of Japan sets monetary policy Friday.

“The durables report was the initial catalyst -- it was horrendous,” said Mazen Issa, senior foreign-exchange strategist at Toronto-Dominion Bank in New York. “The weak data did take the stuffing out of the dollar, and it looks vulnerable to the downside.”

Financial markets have been roiled by volatility this year, fueled by concern that an economic slowdown in China will spread worldwide. Fed policy makers said Wednesday they were “closely monitoring global economic and financial developments.”

The dollar was little changed at  $1.0941 per euro as of 8:15 a.m. in Tokyo, after falling 0.4 percent in New York to complete a four-day loss, its longest since September. The Bloomberg Dollar Spot Index, which tracks the currency versus 10 peers, lost 0.4 percent Thursday. The yen was at 118.80 per dollar Friday from 118.82.

Orders for business equipment fell in December, a sign U.S. companies were slashing capital investment even before the turmoil in global financial markets. Orders for all durable goods -- items meant to last at least three years -- slumped 5.1 percent, the most since August 2014 and reflecting a broad-based pullback.

“Today’s durable goods orders report does not bode well for tomorrow’s Q4 2015 GDP release,” Jason Schenker, president of Austin, Texas-based Prestige Economics, said in an e-mailed note Thursday. It’s possible that U.S. gross domestic product may decline, given the weakening manufacturing sector, he said.

A first reading of growth in the fourth quarter is likely to show the economy slowed to 0.8 percent at an annual rate from 2 percent in the three months through September, according to the median forecast of 87 analysts surveyed by Bloomberg.

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