(Bloomberg) — The dollar retreated following its longest weekly rally of 2015 as a selloff in stocks and commodities fueled concern global growth will sag as the U.S. considers raising interest rates.
The U.S. currency weakened against most major peers amid questions about whether the U.S. faces enough inflation pressure to warrant an increase in borrowing costs. The Federal Reserve meets this week to consider when to tighten monetary policy for the first time since 2006.
“It’s possible that the market is looking at Fed expectations and taking the dollar more notably into account,” Brian Daingerfield, a currency strategist at Royal Bank of Scotland Group Plc’s RBS Securities unit in Stamford, Connecticut, said by phone. “Lower oil prices can potentially be lowering inflation and inflation expectations.”
The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, declined 0.5 percent to 1,204.01 at 2:47 p.m. in New York, after rising to 1,212.78 on Friday, the highest since March 19. The gauge gained for the past five weeks, the longest stretch this year.
The dollar weakened 1.1 percent versus the euro to $1.1099. It earlier reached $1.1129 per euro, its weakest since July 13. The U.S. currency fell 0.5 percent to 123.24 yen.
“The weakness in commodity prices is prompting some market participants to doubt whether the Fed will begin to raise rates in September,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “This obviously takes some of the shine off the dollar in the very near term.”
The dollar remained lower after a report showed U.S. orders for business equipment rose in June for just the second time this year.