The dollar declined from a one-week high as speculation the Federal Reserve will begin reducing its stimulus measures as soon as next month weighed on demand for assets denominated in the U.S. currency.
The U.S. currency reversed gains against the euro and yen as stocks fell and Treasury yields touched two-year highs. The pound climbed to an eight-week high against the dollar after U.K. retail sales rose more than forecast. The Bloomberg U.S. Dollar Index (SPX) rose earlier as jobless claims unexpectedly dropped last week to the lowest level in almost six years. The Fed has been buying $85 billion of bonds a month to support the economy and cap borrowing costs.
“The selling of the dollar is consistent with the weakness in the equity market and the bounce off the yield highs in bonds,” Richard Gilhooly, an interest-rate strategist at TD Securities Inc. in New York. “The better data today is misleading.”
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