April 25
— By Christina Fincher
LONDON (Reuters) - The dollar extended losses across the board on Thursday as concern the U.S. economy was now lagging the global recovery dimmed the once-unrivalled allure of U.S. assets.
The break of key chart levels accelerated the dollar's decline, pushing it to its lowest against the euro and the Swiss franc since early January and to six-week lows against the yen.
Concern that U.S. assets are overvalued have been heightened by a string of uninspiring corporate earnings and signs that economic growth in the second quarter will not be as strong as the first.
"Investors are worried about U.S. asset prices and are looking for better value elsewhere," said Steven Saywell, currency strategist at Citibank.
"A technical break in the dollar index below its 200-day moving average has encouraged further selling and the dollar now seems under attack from all sides."
Selling from Japanese investors, nervous about holding long dollar positions ahead of Golden Week holidays, pushed the dollar below 129 yen, down half a percent from the previous New York close.
The dollar also fell a quarter percent to fresh lows of $0.8955 per euro and 1.6374 Swiss francs, but inched off its worst levels after a disappointing German Ifo business sentiment survey.
EURO RESILIENCE
The Ifo survey showed the west German business climate index fell to 90.5 in April from a downwardly revised 91.5 the previous month.
The unexpected drop underlined doubts about the speed of recovery in Europe's largest economy, but had only muted reaction given that recent U.S. economic data has also been on the weak side.
Data on Wednesday showed orders for U.S. manufactured goods fell more than expected in March, while an anecdotal report from the Federal Reserve echoed officials' recent warnings that risks remain about the pace of the U.S. recovery.
The dollar has been under broad pressure this month, amid fears that a global economic recovery will prompt international investors to reconsider their love-affair with U.S. assets, and look elsewhere for better returns.
Concern about the sustainability of capital flows into the United States have weighed on the dollar, especially as countries such as Canada and New Zealand have already started hiking interest rates in response to a firm pickup in economic growth.
The greenback slid to fresh four-month lows against the Canadian dollar and 14-month lows against the Australian currency.
Recent strong domestic data has raised expectations that the Reserve Bank of Australia will raise interest rates by at least a quarter-point at its meeting early next month.
JAPAN WARNINGS FAIL
Senior Japanese Finance Ministry official Zembei Mizoguchi tried to restrain the yen's rise against the dollar, saying it should not strengthen further because economic fundamentals were stronger in the United States.
But over-familiarity has seen this refrain lose much of its impact, while Japanese exporters are keen to sell dollars forward to hedge against further losses.
"Fund flows, especially from Japanese exporters before the holidays, point to a higher yen for the time being," said Toru Umemoto, currency strategist at Morgan Stanley Japan.
Some traders noted that intervention could be politically sensitive for Japan right now, given the U.S. Senate Banking Committee will meet next week to discuss the strong dollar policy and its impact on U.S. industry.
Japanese officials are generally understood to prefer to keep the dollar trading between 130 and 135 yen but it is widely accepted that Japan needs a weak yen to encourage its exports, in the hopes of driving an export-led recovery.
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