The Dollar Index fell to its lowest level in more than two years as the U.S. economy expanded in the first quarter at a slower rate than forecast, encouraging the Federal Reserve to keep borrowing costs low.
The U.S. currency fell against the euro and yen after the Commerce Department reported that gross domestic product rose at a 1.8 percent annual pace in the first quarter after a 3.1 percent rate of expansion in the last three months of 2010. The median forecast of economists was for a 2 percent pace of growth.
The yen appreciated versus most of its major counterparts after a report showed Japanese investors sold foreign assets last week.
The yen rallied today as Japanese investors were net sellers of foreign bonds during the week ended April 22. They sold 171.8 billion yen ($2.1 billion) in overseas bonds and notes and 5.6 billion yen in overseas stocks, according to figures based on reports from designated major investors released by the Ministry of Finance in Tokyo. They bought 14.6 billion yen in overseas short-term securities. The total net sale was 162.8 billion yen.
New Zealand’s dollar was one of the worst performers against the greenback after Reserve Bank Governor Alan Bollard called the currency’s recent advance “unwelcome.” The dollar sank a day after Fed Chairman Ben S. Bernanke said he was unsure when monetary stimulus will unwind.
A heavy US session kicks off at 1230GMT, with the release of the April ISM-NY Business Index data. Also at 1230GMT, March Personal Income, Expenditures data and the Q1 Employment Cost Index data are released. Personal income is expected to rise 0.4% in March, as payrolls rose 216,000, but hourly earnings were flat, and the average workweek held steady at 34.3 hours. PCE is expected to rise 0.5%, as retail sales rose 0.4% and sales were up 0.8% excluding autos. The core PCE price index is forecast to rise 0.1%. The Employment Cost Index is expected to rise by 0.5% in the first quarter after rising 0.4% in each of the last two quarters.
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