Dollar is not immune from Eurozone problems
The dollar fell for the first time in four days after a report showed manufacturing expanded at the slowest pace in a year, signaling the slowdown overseas is restraining U.S. growth.
The euro rose amid assurances from Greece’s leaders that the nation will abide by its financial obligations, easing concern it may lead the currency bloc back into turmoil. The Swiss franc fell after a news report said the central bank holds the exchange rate with the euro in an “unofficial corridor.”
“Some of the strong momentum in the U.S. has probably slowed,” Robert Sinche, a strategist at Amherst Pierpont Securities LLC in Stamford, Connecticut, said by phone. “The bullishness hasn’t gotten too great. It’s difficult for the dollar to generate much more upside for the first half of this year.”
The Bloomberg Dollar Spot Index, a gauge of the currency’s performance against 10 major peers, fell 0.3% to 1,164.70 as of 1:29 p.m. New York time. It rallied 3.3% in January.
The euro gained 0.5% to $1.1342 and advanced 0.3% to 133.07 yen. The yen fell 0.2% to 117.29 per dollar.
The Institute for Supply Management’s man index dropped to 53.5 from 55.1 in December. The median forecast in a Bloomberg survey of 74 economists called for a decline to 54.5.
The manufacturing reading came after a report last week that the world’s biggest economy expanded at a slower pace in the fourth quarter. U.S. gross domestic product grew at a 2.6% annualized rate after a 5% gain in the third quarter that was the fastest since 2003.
“The market got ahead of themselves thinking U.S. growth trend is above 3% and that’s been tempered a little bit,” Sinche said.
Greece’s prime minister and finance minister are touring Europe this week to seek support for their plans to strike a revised deal with official creditors. Prime Minister Alexis Tsipras is seeking to repair damage after relations with his European partners suffered a rocky first week.
Bond yields spiraled and bank stocks plummeted after Finance Minister Yanis Varoufakis said Greece won’t take additional aid under its bailout agreement and seeks a reworked deal with creditors by the end of May.
“There’s definitely a lot of focus on the Greek story, we’re getting mixed signals from the prime minister,” said Jonathan Webb, head of foreign-exchange strategy at a unit of Jefferies International Ltd. in London. “There’s room for agreement, but it could be a bit messy before we get there.”
In Switzerland, the central bank is operating a corridor of 1.05 to 1.10 francs per euro, Schweiz am Sonntag reported Sunday, citing unidentified people familiar with the matter.
The Swiss franc weakened 1% to 1.0450 per euro. The currency surged 8% against the dollar last month, the biggest winner among major currencies, after the Swiss National Bank unexpectedly removed its cap against the euro to let the franc appreciate.
Russia’s ruble was the biggest loser, slumping 13%, as the central bank cut interest rates from an 11-year high to stoke economic growth.