Dollar slips after weak US data supports dovish Fed

Washington (Apr 16)  The U.S. dollar hit its lowest level against the euro in a week on Thursday after traders concluded that recent weakness in U.S. economic data could delay the first Federal Reserve rate hike.

U.S. housing starts rose far less than expected in March and permits recorded their biggest drop since last May, while a separate report showed a surprise rise in the number of people seeking unemployment aid last week.

Traders interpreted the data as another sign that the U.S. economy struggled to bounce back in March, reducing the likelihood of a Fed rate hike by June. A Fed hike is expected to boost the dollar bydriving investment flows into the United States.

"This is more dollar weakness, driven by the market coming around to the fact that these economic releases are weaker," said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago. "Everything across the board screams for the Fed to be patient."

The dollar pared its losses, however, after data showed factory activity in the U.S. mid-Atlantic region accelerated in April and Fed Vice Chair Stanley Fischer told cable television network CNBC that he hoped the market would take into account that the Fed is likely to raise rates.

The dollar index, which measures the greenback against a basket of six major currencies, was still on track for its third straight session of losses.

Analysts said that concerns over the standoff between Greece and its creditors limited the euro's gains against the greenback. The Financial Times reported that the International Monetary Fund rebuffed an informal request by Greek officials to delay loan repayments.

The Australian dollar was last up 1.50 percent against the dollar at $0.7790, hovering at a nearly three-week high hit earlier in the session, after data showed employment sped past expectations in March while jobs created in February were revised up sharply.

"It's hard to be as pessimistic when you've had such a strong number," said Steven Englander, global head of G10 foreign exchange strategy at CitiFX in New York.

The euro was last up 0.54 percent against the dollar at $1.0735 after hitting a one-week high of $1.07695. The dollar was also down 0.66 percent against the Swiss franc at 0.9588 franc. The dollar was last up 0.07 percent against the yen at 119.265 yen.

The dollar index was last down 0.45 percent at 97.88.

Source: CNBC