A gauge of the dollar remained lower after retreating from a five-year high amid speculation the currency strengthened too rapidly and before U.S. data tomorrow forecast to show job growth slowed.
The Bloomberg Dollar Spot Index gained 10 percent in the five months through November, sending its relative strength at the end of last week above the 70 level that signals to some traders that an asset may reverse course. U.S. Treasury yields remained below this year’s averages. Australia’s dollar was near a four-year low before the Reserve Bank meets today to set policy. The yen remained stronger from yesterday after Moody’s Investors Service cut Japan’s credit rating.
“U.S. yields can’t really go up in an environment where yields aren’t rising globally, so there’s going to be profit taking on dollar positions,” said Naohiro Nomoto, an associate for currency trading at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Eventually though, the dollar will strengthen, especially against the yen and euro, because of continued monetary easing” in Japan and Europe, he said.
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