The Dollar Index decline to a two-month low amid speculation the Federal Reserve will announce after a two-day policy meeting that it will continue its bond buys to trigger economic progress.
The meter submerge for a fifth day, the longest stretch this year, as ADP Research Institute said America’s private employers added fewer jobs than forecast. The Fed purchases $85 billion of bonds a month under its quantitative-easing strategy to put downward pressure on borrowing costs. The pound advances after U.K. manufacturing (PMITMUK) shrank lower than assumed in April. Australia’s dollar slid after China’s manufacturing growth slowed.
“The dollar weakness is just positioning ahead of the Fed numbers,” Melinda Burgess, a currency strategist at Royal Bank of Scotland Group Plc in London, said in a telephone interview. “You had the ADP report as well, which came in below expectations, which may be having an impact on the dollar. The market is shifting their expectations around Fed policies, given the disappointments we’ve seen in U.S. data lately.”
The Dollar Index (DXY), which Intercontinentalexchange Inc. uses to track the greenback versus the currencies of six U.S. trading partners, gave up 0.2 percent to 81.556 at 12:44 p.m. in New York. It touched 81.331, the least since Feb. 25.
The greenback stepped back 0.2 percent to $1.3196 per euro and reached $1.3243, the worst point since Feb. 25. The U.S. currency miss 0.2 percent to 97.26 yen. The euro moved a notch at 128.31 yen after short of 0.4 percent earlier.
Losses Pared
The dollar pared losses versus the euro after the Institute for Supply Management’s manufacturing index dive to 50.7 in April, from March’s 51.3.
Trading in over-the-counter foreign-exchange options summed up $15 billion, in comparison with $24 billion yesterday, according to data reported by U.S. banks to the Depository Trust Clearing Corp.. Volume in options on the dollar-yen exchange rate amounted to $3.1 billion, the biggest share of trades at 20 percent. Euro-Dollar options were the second most actively exchanged, at $2.5 billion, or 17 percent.
Dollar-yen options trading was 70 percent below the average for the past five Wednesdays at the same time in the day, and Euro-Dollar options trading was 57 percent lower.
Aussie Declines
Australia’s dollar shed versus the majority of its 16 most-traded counterparts after a Chinese government report showed a manufacturing buying-managers index dropped to 50.6 in April from 50.9 the previous month. China is Australia’s biggest trading partner.
The Aussie gave up 0.8 percent to $1.0285 after surging yesterday to $1.0385, the best point since April 17.
The Mexican peso dropped versus most major counterparts amid speculation the country’s central bank will trim borrowing costs. Governor Agustin Carstens announced April 29 policy makers would consider lowering rates for a second time this year if the yearly inflation rate went down under 4 percent.
The peso stepped 0.8 percent back to 12.2339 per dollar.
The Federal Open Market Committee will release a statement at 2 p.m. after its assembly ends in Washington.
‘Selling Pressure’
“Into the Fed meeting, I think that we’re going to see further U.S. dollar selling pressure,” said Hans-Guenter Redeker, head of global foreign-exchange strategy at Morgan Stanley in London. “The Fed is going to signal that it’s going to stay accommodative, that it’s going to reconfirm the link between unlimited quantitative easing and the state of the economy.”
The U.S. currency may drop below 94 yen within the next three weeks, Redeker stated.
American companies boosted 119,000 workers to payrolls last month, figures from Roseland, New Jersey-based ADP displayed today.
U.S. nonfarm payrolls advanced by 145,000 workers last month after acquiring 88,000 in March, a Bloomberg survey showed before the Labor Department reports the data May 3.
The dollar abates 1 percent in the past month, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-market currencies. The euro bolstered 1.9 percent, the best performance, and the yen diminished 5.6 percent.
Markets in the U.K., Denmark and Ireland were open today, while most others in Europe and Asia were closed for holidays.
