Dollar drops versus major trade partners

The dollar fell for a second week against its major trading partners as reports showing growth cooled in the US fueled speculation the recovery of the world’s biggest economy may be stagnating.

New Zealand’s currency approached a record high after China Investment Corp said it will buy the nation’s bonds. The Swiss franc rose to its strongest against the euro and the dollar as speculation increased Greece may need to restructure its debt, increasing demand for safety. US employment growth slowed this month, a report next week is forecast to show.

“We’ve had some disappointing data, and it has weighed on the dollar,” said Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon Corp, the world’s largest custodial bank, with more than $20 trillion in assets under administration. “There are so many fleas on that dog — no one necessarily wants to hold dollars for longer than they have to, and the Swiss franc is benefiting from that.”

The Dollar Index, which IntercontinentalExchange Inc uses to track the greenback against the currencies of six US trading partners including the euro, pound and yen, dropped 0.9 per cent to 74.758, from 75.435 on May 20.

The greenback slid 1.1 per cent to $1.4319 per euro, from $1.4161 last week. It also depreciated 1.1 per cent to 80.80 yen, from 81.70. The yen was little changed at 115.67 per euro.

NO MANIPULATION
The US said yesterday China has made “insufficient” progress on letting the yuan rise and urged faster appreciation, without branding the world’s fastest-growing major economy a currency manipulator. The report, originally due in April, said “no major trading partner” of the US met the legal standard of improperly manipulating its currency.

Futures traders cut bets the dollar will fall versus five of its major peers to the lowest since January in the week ended May 24, according to data from the Commodity Futures Trading Commission yesterday and data compiled by Bloomberg.

The difference in the number of wagers by hedge funds and other large speculators on a decrease in the dollar versus the euro, yen, Australian dollar, Canadian dollar and Swiss franc compared with those on an advance — so-called net shorts — was 115,541 on May 24, the smallest since January 16.