Tokyo
A key gauge of the dollar fell to a more than six-month low as momentum picked up after the cur-rency wiped out a key technical level Friday, while Japan’s currency climbed against all its major peers.
The Bloomberg Dollar Spot Index slid Friday to the weakest level since Jan. 7 and was set for a fourth straight weekly loss. It has slumped more than 8% from a peak in March, when haven seekers had piled into the greenback during the height of the market turmoil caused by the coronavirus pandemic. Some strategists are now predicting an extended period of weakness in the U.S. currency.
Investors have turned on the dollar amid negative real rates in the U.S. and on bets the Federal Re-serve will keep policy accommodative to jump-start the U.S. economy. It doesn’t help that tensions be-tween Washington and Beijing are escalating, while Covid-19 cases have resurged in the U.S. at a time when domestic jobless claims are climbing and five-year yields on Friday set record lows.
“There is considerable medium-term support for a view that the dollar is in the early stages of a big picture turn” lower, said Alan Ruskin, Deutsche Bank AG’s chief international strategist. “The mag-nitude of the turn will be determined” in part by how many iterations of easing the Fed has to go through to gain traction. The dollar was already on the back foot this week, after the euro got a boost from the European Un-ion’s landmark deal for a 750-billion-euro ($871 billion) economic recovery fund.
The Bloomberg Dollar Spot Index declined 0.5%. The measure has lost more than 2.6% in July. The euro climbed as much as 0.4% to $1.1638, its strongest level since September 2018, while U.S. currency fell as much as 1% to 105.76 yen.—Agencies
