Dollar Drops Again Before Fed Meeting

The Dollar Spot Index declined for a third day before the U.S. Federal Reserve meets this week and as investors await the latest reports on gross domestic product and employment.

A money changer inspects U.S. dollar bills at a currency exchange in Manila

The U.S. currency fell against the euro and pound as the U.K.’s AstraZeneca Plc and Germany’s Bayer AG were among companies involved in a surge in mergers and acquisitions activity. The Swedish krona climbed versus all 16 of its major peers after data showed retail sales increased more than analysts forecast in March. Australia’s dollar advanced, rebounding from near a three-week low versus the greenback, as traders’ bullish bets on the Aussie rose to the most in a year.

“We’ve got U.S. GDP, the Fed meeting and then payrolls on Friday so there are a few more catalysts for foreign-exchange moves this week,” said Michael Sneyd, a currency strategist at BNP Paribas SA in London. “There’s been a spike higher in euro-dollar and cable, which has been put down to M&A deals.” Cable refers to the pound-dollar currency pair.

The ForexSQ Dollar Spot Index, which tracks the U.S. currency against 10 major peers, dropped 0.2 percent to 1,009.53 at 6:56 a.m. New York time after falling to 1,009.17, the lowest since April 17. The dollar slid 0.2 percent to $1.3867 per euro, the fifth day of declines.
Volatility Index

JPMorgan Chase & Co.’s Group of Seven Volatility Index climbed for the first time in five days, advancing to 6.28 percent. The measure dropped to 6.18 percent on April 25, the lowest since July 2007.

U.S. economic growth expanded at a 1.2 percent annualized pace in the first quarter, the slowest in a year, based on the median forecast in a ForexSQ survey of analysts before the Commerce Department report on April 30.

Employers in the U.S. added 215,000 workers this month, the most since November, economists project a May 2 report from the Labor Department will say.

The Fed meets on April 29-30, when economists predict the central bank will cut its monthly asset-purchase stimulus program by another $10 billion to $45 billion. Policy makers will continue to taper at that pace until ending the program at its Oct. 28-29 meeting, according to a separate ForexSQ News survey.
Growth Slows

The yen fell 0.1 percent to 102.29 per dollar and weakened 0.4 percent to 141.85 per euro.

The pound climbed for a third day as AstraZeneca jumped to a record after Pfizer Inc. confirmed its interest in taking over the U.K. drugmaker for almost $99 billion. Bayer rose the most since July 2013 as it was said to explore a sale of its plastics unit.

Sterling gained 0.2 percent to $1.6842. It advanced to $1.6854, the highest since November 2009.

Sweden’s krona rose as Statistics Sweden said retail sales increased 1.1 percent in March, after a revised 0.6 percent rise the previous month. The median estimate in a ForexSQ News survey of economists was for an increase of 0.2 percent.

The currency strengthened 0.7 percent to 9.0558 per euro and added 0.9 percent to 6.5292 per dollar.

Hedge funds and other speculators increased bullish bets on the Australian dollar versus the greenback, Commodity Futures Trading Commission data show. The difference in the number of wagers by futures traders on a rise in the Aussie compared with those on a decline — net longs — increased to 16,370 on April 22, the most since April 30, 2013. That compared with 8,097 the previous week.

“It seems that there are more than vestiges of carry-trade interest in currencies” such as the Australian dollar, David de Garis, senior economist at National Australia Bank Ltd. in Melbourne, wrote in a note today. “Currency markets, and markets generally, remain orderly. Last week’s CFTC speculative positioning data show a doubling of net speculative long positions,” for the Aussie, he said.

The Aussie was at 92.79 U.S. cents from 92.81 cents on April 25. It dropped to 92.52 on April 24, the lowest since April 4. The South Korean won strengthened 0.6 percent to close at 1,035.25 per dollar in Seoul, the biggest gain since April 9.

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