A gauge of the dollar headed for the steepest weekly slide since May 2009 on speculation the Federal Reserve isn’t in a hurry to raise interest rates.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major currencies, is retreating just a week after reaching the highest level since Bloomberg began compiling the data in 2004. The dollar tumbled Wednesday after the Fed indicated it will raise rates more slowly than it previously predicted. HSBC Holdings Plc, one of Wall Street’s biggest proponents of the dollar, said the rally may be over.
“This is not time to turn bullish with fanciful forecasts -- most of the meat of the dollar bull-run is done,” David Bloom, global head of currency strategy at HSBC Holdings in London, said in an interview on Bloomberg Television. “The Fed rate hike is in the price. The big motivation behind the dollar bull market has dried up.”
The Bloomberg Dollar Spot Index declined 1.3 percent to 1,195.21 at 3:14 p.m. in New York. The gauge has fallen as much as 2.6 percent this week, heading for the first five-day decline since the week ended Feb. 13.
Against the yen, the dollar is down 1.1 percent to 120.14 per yen and has slumped 3.7 percent to 12.0315 South African rand this week.
HSBC cut its 2016 forecast for the dollar to $1.10 per euro on Thursday, from $1.05 previously.
Fed Chair Janet Yellen said at her March 18 press conference a tightening in June can’t be ruled out, though removing the central bank’s commitment to patience “doesn’t mean we are going to be impatient.” Fed policy makers also cut their estimate for the federal funds rate at year-end to 0.625 percent, down from a forecast of 1.125 percent in December.