The US dollar slid for a third week, capping the longest streak of losses in almost a year, as a report showing cracks in the US labor market threatened the outlook for interest-rate increases.
The greenback fell against all except one of its 16 major peers, as US employers added fewer workers last month than in any other month since December 2013, muddying a rare bright spot in the US recovery.
Economic reports have lagged analyst forecasts since early January, with the US Federal Reserve noting after its latest meeting that “growth has moderated somewhat.”
“It’s just one more sign that economic growth slowed in the first quarter,” said Kate Warne, a St Louis-based investment strategist at Edward D. Jones & Co, which manages US$870 billion. “Whenever investors see a weak number, they’re likely to conclude that the Fed will wait longer before raising rates.”
The Bloomberg Dollar Spot Index, which tracks the US currency against 10 major peers, lost 0.8 percent on the week to 1,182.26, its lowest closing price in a month. Its last three-week skid came in June last year.
The greenback also tumbled a third week against the euro and the yen, declining 0.8 percent to US$1.0976 versus the shared European currency and 0.1 percent to ￥118.97.
The Fed is weighing data for signs the US economy can weather higher borrowing costs as global growth stalls.
US companies added 126,000 jobs last month, almost half the 245,000 median estimate of 98 analysts surveyed by Bloomberg News. The increase was lower than the most pessimistic forecast and followed a 264,000 gain in February that was smaller than initially reported, the US Department of Labor said.
“It’s pretty shocking,” said John Vail, chief global strategist at Nikko Asset Management Co, which oversees US$160 billion globally. “This report obviously does push out expectations for a Fed hike to some degree, although we all know that the data can change very rapidly.”
The rate for fed funds futures for December fell four basis points to 0.34 percent, indicating about one-in-three odds of a rate increase by the Fed’s meeting that month.
Policymakers will still increase rates in August or September, according to Bill Gross, who runs the US$1.5 billion Janus Global Unconstrained Bond Fund.
“They want to get off zero, if only to prove that they don’t have to stay at zero for a long, long time,” he said after the payrolls release.
Fed minutes due on Wednesday might give more clarity on the central bank’s approach. At their last meeting, policymakers revised down interest-rate projections, even as they removed a commitment to being “patient” on the timing of rate increases.
The US currency declined 1.8 percent after that meeting, the biggest move in six years on a closing basis. It pared gains among a basket of 10 developed market peers to 19 percent for the last 12 months, according to Bloomberg Correlation-Weighted Indexes.
“You’re getting some people reappraising the path of Fed rate increases and pushing it back,” said David Donabedian, chief investment officer in Atlanta at Atlantic Trust Private Wealth Management, which oversees US$26.2 billion. “But, I think as the year evolves we’re going to see that the US economy does fine — not spectacular, but solid.”
Malaysia’s ringgit led an advance in Asia.
The ringgit climbed for a third day on Thursday.
Gains in the ringgit were supported by higher oil prices, according to Bank of Singapore Ltd.
“Asian currencies are rallying on expectations that the Fed may delay the rate hike as soft US data continue to fuel concerns about the US growth outlook,” Bank of Singapore foreign-exchange strategist Sim Moh Siong said.
The ringgit rose 0.8 percent to 3.6690 against the US dollar in Kuala Lumpur, data compiled by Bloomberg show.
The Bloomberg US Dollar Spot Index fell 0.3 percent on Thursday after falling 0.2 percent on Wednesday.
The Fed has indicated it plans to raise interest rates this year for the first time since 2006, most likely in the second half, and said it would go slow with the pace once it starts.
Malaysian government bonds climbed for a third day on Thursday.
The five-year yield decreased two basis points, or 0.02 of a percentage point, to 3.56 percent. That is the lowest since the debt was sold in April last year.
The US dollar fell against the New Taiwan dollar on Thursday, the holiday-shortened week’s last trading day, shedding NT$0.059 to close at NT$31.303 as fears over an interest rate hike by the US Federal Reserve faded to some extent after the disappointing economic data released by the US, dealers said.
Selling in the US dollar increased in Taipei as traders took cues from the strength of other regional currencies, in particular the won — which the NT dollar closely tracks — to buy into the local unit, the dealers said.
However, the losses suffered by the US dollar were limited by the central bank’s intervention to assuage the impact of the NT dollar’s appreciation in a bid to boost exports, the dealers said.
The greenback opened at the day’s high of NT$31.362 and moved to a low of NT$31.201 before rebounding. Turnover totaled US$759 million during the trading session.
The won added 0.4 percent to 1,097.90 per US dollar in a second day of gains on Thursday.
The baht gained 0.2 percent and the yen was steady at 119.68 per US dollar after strengthening 0.3 percent in the last session.
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