The dollar headed for its biggest weekly drop versus the yen since April as Treasuries rose on bets the Federal Reserve will keep interest rates lower for longer and European financial stress boosted haven demand.
A gauge of the dollar was poised for its fourth loss in five weeks after minutes of the Fed’s June meeting failed to provide additional insight on the pace of rate increases. The yen climbed against most of its 16 major peers as concerns over Portugal’s banking sector prompted demand for safer assets. The Canadian dollar slumped after employment unexpectedly fell last month, while South Korea’s won slid for a sixth day amid speculation the central bank will cut interest rates.
“There’s a modest downward bias on the dollar — the Fed hasn’t acknowledged the significant improvement in the labor market, they’re looking increasingly behind the curve in terms of their policy stance,” Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, said in a phone interview. “Investors have been more jittery over the financial health of Europe.”
The dollar was little changed at 101.33 yen at 9:33 a.m. in New York, having declined 0.7 percent this week, the most since the period ended April 11. The dollar traded at $1.3606 per euro. The yen was at 137.87 per euro after appreciating to 137.50 yesterday, the strongest since Feb. 6.
The benchmark U.S. Treasury 10-year note yield fell one basis point, or 0.01 percentage point, to 2.53 percent and has declined 12 basis points this week.