The dollar dropped against most major peers amid speculation Federal Reserve Chairman Ben S. Bernanke will seek to damp investor expectations of a reduction in stimulus when he testifies to Congress tomorrow.
The euro rose for the first time in three days versus the greenback even after German investor confidence unexpectedly fell. India’s rupee reached a two-week high after policy makers raised interest rates. Sweden’s krona climbed after minutes were released of the central bank’s last meeting. Bernanke said July 10 U.S. unemployment and inflation warrant further stimulus.
“The message is resonating with investors that any Fed tapering is data-dependent,” Andrew Wilkinson, chief economic strategist at Miller Tabak and Co. in New York, said in a telephone interview. “That’s hindering the advance in the dollar, which built a head of steam earlier in the month.”
The dollar lost 0.8% to $1.3162 per euro at 2:53 p.m. New York time. The U.S. currency depreciated 0.7% to 99.18 yen. The shared European currency was little changed at 130.54 yen.
JPMorgan Chase & Co.’s Global FX Volatility Index, a measure of currency fluctuations, slipped to almost a one-month low. The gauge was at 10.50% after dropping to 10.47% on July 9, the lowest level since June 18. The average this year is 9.32.
The yield on U.S. Treasury two-year notes touched 0.32%, almost the lowest since June 20.
“The yield has been receding, and as it recedes it’s been taking the dollar lower across the board,” Sebastien Galy, a foreign-exchange strategist at Societe Generale SA in New York, said in a phone interview.
Brazil’s currency slid versus its 31 most-traded counterparts after a report showed inflation slowed, damping bets the central bank will increase borrowing costs at a faster place. The real weakened 1.4% to 2.2522 per dollar after strengthening 0.5% earlier and rallying 2.1% yesterday in the biggest jump since June 2012.
The rupee gained after the Reserve Bank of India increased the marginal standing facility rate and the bank rate to 10.25% from 8.25% late yesterday in Mumbai, according to a statement on its website. The monetary authority also said it will conduct open-market sales of government debt totaling 120 billion rupees ($2 billion) on July 18.
The Indian currency appreciated 1% to 59.3200 per dollar, according to prices from local banks compiled by Bloomberg. It reached 59.1250, the strongest since July 1. The rupee fell to a record 61.2125 on July 8.