By Richard Leong
NEW YORK (Reuters) – The dollar fell to a five-week low against a basket of currencies on Wednesday as traders reduced bets of an imminent U.S. interest rate increase following a poor jobs report and perceived dovish comments from the Federal Reserve chief.
The euro reached a near four-week peak against the greenback even with German Bund yields posting record lows as the European Central Bank began buying corporate debt for its bond purchase program in a bid to boost the euro zone economy.
Stronger-than-expected Chinese import data boosted the Australian and New Zealand dollars and other commodity-sensitive currencies versus the greenback.
“With Fed rate expectations collapsing precipitously over the past week thanks to Friday’s abhorrent May labor market report, investors have been quick to recalibrate to the reality that the Fed liftoff isn’t coming until at least September, but more likely December,” said Christopher Vecchio, currency analyst at DailyFX in New York.
On Monday, Fed Chair Janet Yellen gave an upbeat view on the U.S. economy but refrained from offering a possible timing on a rate increase.
U.S. interest rate futures implied traders saw nearly no chance the Fed would increase rates at its policy meeting next week
The dollar index, which tracks the greenback against six currencies, shed 0.24 percent at 93.601 <.DXY>. It touched 93.425 earlier on Wednesday, the lowest since May 6.
The euro strengthened to $1.1397, up 0.4 percent on the day
“It could be internationally destabilizing,” TD Securities’ New York-based senior FX strategist Mazen Issa said of a “Brexit.” “The market is too complacent. It (sterling) should be weaker,” he said.
Meanwhile, the greenback weakened 0.4 percent to 106.86 yen
The encouraging Chinese data spurred buying of oil, metal and other commodities, which in turn lifted the currencies of those exporting countries.
The Australian dollar
(Additional reporting by Anirban Nag in London; Lisa Twaronite in Tokyo; Editing by Will Dunham and Chizu Nomiyama)