The dollar fell versus 14 of its 16 most-traded peers as business activity in the U.S. unexpectedly shrank for the first time in more than three years amid bets the Federal Reserve won’t slacken its bond buying under quantitative easing.
The euro climbed against the dollar, reversing earlier losses, amid speculation that action by the European Central Bank on May 2 will bolster the 17-nation region’s economy. The yen gained versus the greenback, paring its seventh straight monthly loss, as U.S. Treasury 10-year note yields touched the lowest this year. The Fed opened a two-day policy meeting.
“What I’d look for is continued signaling that we’ll continue to buy bonds at approximately the current pace, and that the economy is only recovering gradually,” Nick Bennenbroek, the head currency strategist at Wells Fargo & Co. in New York, said in an interview on Bloomberg Television’s “Lunch Money” with Julie Hyman. “If you get those kinds of signs, it’s going to be a relative non-event. They will probably weigh on the dollar against growth-sensitive currencies.”