NEW YORK/LONDON- The dollar posted its second-steepest weekly decline versus other major currencies this year on Friday, while the yen strengthened sharply, and the dollar traded below 150 yen, as concerns grow about the weakening global economic outlook.
Cooler-than-expected US inflation data on Tuesday and Wednesday hastened market expectations for how soon the Federal Reserve will cut rates. Such a move would weaken a major dollar support and could come as early as next year’s first quarter.
The dollar index which measures the greenback against six other major currencies, slid to lows last seen on Sept. 1, while the yield on benchmark 10-year Treasury notes fell to a two-month low of 4.379 percent .
Data that showed US single-family homebuilding increased marginally in October briefly supported the dollar, but with inflation the main market driver it remained lower on the day.
“The spate of recent data points towards progress being made on the inflation front,” said Bipan Rai, North America head of FX strategy at CIBC Capital Markets in Toronto. “It really feels like the initial momentum now is for the dollar to move lower.”
The dollar index fell 0.49 percent on the day, hitting a low of 103.85 that increased the greenback’s decline over the past five days to almost 1.8 percent – its biggest weekly drop since mid-July.
“Everything is pointing towards a fourth-quarter slowdown in the United States,” said Thierry Wizman, global FX and interest rate strategist at Macquarie in New York, adding that a key signal would be companies guiding growth expectations lower. – Reuters
