The US dollar fell for a third day versus the Swiss franc on Friday, the longest losing streak in a month, as investors bet the Federal Reserve will take steps to stimulate growth after US employment unexpectedly stagnated last month.
The franc had its biggest weekly gain on record versus the euro, and currencies of commodity exporters dropped as stocks fell, boosting haven demand. The greenback had for its first weekly loss in almost a month versus the franc amid speculation the Fed may start a third round of asset purchases, or quantitative easing, debasing the US currency. The euro fell versus most peers on concern Europe’s debt crisis is worsening.
“The knee-jerk reaction is to take risk off the table,” said Jack Spitz, managing director of foreign exchange at National Bank of Canada in Toronto. “This number goes a long way to firming up expectations that another round of asset buying could be in the cards.”
The US dollar slumped as much as 3.1 percent versus the franc to SF0.77 before trading at SF0.788 at 5pm in New York. It was the biggest intraday drop since Aug. 9, the day the Fed pledged to keep interest rates near zero until mid-2013. The greenback fell 0.2 percent to ￥76.80, from ￥76.93.
The euro slid 1.3 percent to SF0.112, dropping 4.2 percent for the week, the biggest decline since the 17-nation currency’s debut in 1999. It fell 0.5 percent to ￥109.11. The euro was down 0.4 percent to US$1.4205.
The Dollar Index, which IntercontinentalExchange uses to track the greenback against the currencies of six major US trade partners, including the euro and yen, rose 0.3 percent to ￥74.706, from ￥74.479 on Friday.
Brazil’s real was the biggest loser against the US dollar as risk appetite fell and the Standard & Poor’s 500 Index tumbled 2.5 percent.
“Stocks are much lower, and if they continue to unwind, it’ll continue the risk-off sentiment,” said Carl Forcheski, a director on the corporate currency sales desk at Societe Generale SA in New York. “The market exhausted itself, and it’s running into a bit of a bear trap.”
US President Barack Obama will address Congress on Thursday on his plans to boost jobs and accelerate growth.
The euro weakened against the franc as a Bloomberg survey showed factory orders in Germany, Europe’s biggest economy, likely decreased 1 percent in July from the prior month.“The outlook for the euro is pretty bad,” said Daisuke Karakama, a market economist in Tokyo at Mizuho Corporate Bank Ltd, a unit of Japan’s third-biggest bank by market value. “For the past six months, there’s been no good news for it. Probably there’ll be none going forward either.”
The Swiss franc surged 13 percent this year against nine other developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The greenback lost the most, 6.4 percent, while the euro was little changed.