The dollar slipped to a three-year low against a basket of currencies on Friday, headed for its biggest weekly loss in two years, as bearish factors offset support the U.S. currency could take from rising Treasury yields.
Extending overnight losses, the dollar's index
against a group of six major currencies lost about 0.4 percent to
88.253, the lowest since December 2014. The index was on track to lose
more than 2 percent on the week in its largest decline since February
The U.S. currency has been weighed down by a variety of
factors this year, including concerns that Washington might pursue a
weak dollar strategy and the perceived erosion of its yield advantage as
other countries start to scale back easy monetary policy.
also suspect that confidence in the dollar has been eroded by mounting
worries over the deficit in the United States, which is projected to
balloon to near $1 trillion in 2019 amid a government spending splurge
and large corporate tax cuts.
"There really are no signs of the
dollar recovering any time soon. Participants are bracing for dollar/yen
to head towards 105 and the euro to climb past $1.25," said Shin
Kadota, senior strategist at Barclays in Tokyo.
for the market to see the dollar rebounding, especially as decent U.S.
fundamentals seem to be providing no support for the currency," Kadota
Indeed, the dollar failed to gain momentum after data on
Wednesday showed U.S. inflation was stronger than expected in January,
sending Treasury yields to four-year highs, as investors bet the Federal
Reserve could increase interest rates as many as four times this year.
euro was up 0.4 percent at $1.2553 after reaching a three-year top of
$1.2556 and poised to gain 2.4 percent this week. The Swiss franc
reached 0.9190 franc per dollar, its strongest since June 2015.
dollar was down 0.4 percent at 105.685 yen after slipping to 105.54,
its lowest in 15 months. It was on track for a weekly loss of 2.9
The reappointment of Haruhiko Kuroda as Bank of Japan
governor and the nomination of BOJ executive director Masayoshi Amamiya
and Waseda University professor Masazumi Wakatabe as deputy governors
had little impact on the yen, although the proposed leadership trio were
seen certain to keep the central bank on an ultra-loose policy path.
are no significant changes to the current BOJ regime with the governor
chosen for another term, and a central banker and a reflationist
academic picked as his deputies," said Shusuke Yamada, chief Japan FX
strategist at Bank of America Merrill Lynch.
"This should clear
some uncertainty regarding BOJ personnel, but it unlikely to impact the
currency market at a time when the dollar is broadly weaker," Yamada
The pound rose 0.25 percent to $1.4134, having gained about 2 percent on the week.
Australian dollar added 0.25 percent to $0.7965. The Aussie, sensitive
to shifts in risk sentiment, had slipped to near 1-1/2-month low of
$0.7759 a week ago during a tumble in global equities before bouncing