The dollar weakened on speculation the Federal Reserve will be slow to raise interest rates amid uneven global growth, boosting precious metals and bonds. Most Asian stocks fell and futures foreshadowed a retreat in European equities.
The US currency slid against all major peers, dragging the Bloomberg Dollar Spot Index down for a second day. A gauge of emerging-market currencies climbed to the highest level since July 2015, gold extended Tuesday’s rally from this month’s low and China sold debt at a lower yield than was forecast. Crude oil lingered below $43 a barrel after industry data showed an increase in American stockpiles.
While better-than-expected US jobs data briefly buoyed the dollar on Friday, odds of the Federal Reserve raising interest rates in 2016 remain below 50 percent amid evidence of faltering growth elsewhere. Global equities climbed over the last four days amid optimism central banks from London to Tokyo will keep expanding stimulus. India’s monetary authority said Tuesday its policy stance remains accommodative, while the Reserve Bank of New Zealand is forecast to lower its benchmark interest rate to a fresh record on Thursday.
“The overriding issue in the Asia basket is the Goldilocks principle that the US economy is healthy but not so buoyant enough to elicit any sort of Fed response,” said Stephen Innes, a currency trader at Oanda Asia Pacific Pte Ltd. in Singapore. There’s a perception that “central banks are going to remain accommodative for the foreseeable future.”
Japan reported a bigger-than-expected increase in machinery orders for June and a measure of consumer confidence in Australia climbed, reports showed Wednesday. France is scheduled to release industrial output data and earnings are due from companies including Prudential Plc and Sun Life Financial Inc.
Currencies
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, fell 0.4 percent as of 7:19 a.m. London time. The MSCI Emerging Market Currency Index added 0.4 percent, climbing for the fifth day in a row.
The yen added 0.5 percent to 101.38 per dollar, while South Korea’s won led gains in Asia with a 1.3 percent surge. New Zealand’s dollar strengthened 0.6 percent, while Australia’s currency advanced 0.3 percent.
“The US dollar is unlikely to rally significantly against the commodity-sensitive currencies,” said Elias Haddad, a senior currency strategist at Commonwealth Bank of Australia in Sydney. “Monetary policy settings around the world are going to be loose or looser going forward, and fiscal policy is expected to be more accommodative. That will support the global economic recovery and underpin commodity prices.”