The dollar exchanged 0.4 percent from its worst mark in almost three weeks versus the euro as investors await a conclusion on U.S. financial policy from Federal Reserve leaders starting a two-day assembly today. The Bloomberg U.S. Dollar Index was near a five-week low after the retreat of Lawrence Summers from running to be the next Fed chairman build up assumption that the central bank will take a more gradual approach to trimming back bond purchases in order to debase the currency. The euro stayed on top versus the pound before a report that may display investor confidence in Germany soared to a half-year high. Summers Exit The Federal Open Market Committee will probably decide to slow its monthly bond purchases to $75 billion from $85 billion, according to the median estimate of economists in a Bloomberg News survey on Sept. 6. Forward Guidance A gauge of one-month implied volatility of the dollar-yen currency pair depreciated to 11.69 percent from yesterday, when it reached 12.28 percent, the highest since Sept. 11. ‘First Tightening’ “One possibility of course is that the Fed formally lowers the unemployment rate threshold at which they will contemplate a first tightening” to prevent adding upward pressure on Treasury yields, Ray Attrill, the global co-head of currency strategy at National Australia Bank Ltd. in Sydney, wrote in a report today. “The 2016 projections could end up being the major discussion point out of the FOMC and the subsequent Bernanke press conference, more so than a likely decision to commence ‘tapering.’” Sell Euro “We’re getting close to the point where we’re at good levels to sell the euro,” Adarsh Sinha, the head of Asia Pacific Group of 10 foreign-exchange strategy at Bank of America Merrill Lynch in Hong Kong, said in a Bloomberg Television interview. Data has been good from the euro economy, “but keep in mind a lot of it has been survey-based indicators and the most important thing to us is inflation in the eurozone is still very, very low.” The European Union’s statistics office in Luxembourg said yesterday annual consumer-price growth slowed to 1.3 percent from 1.6 percent in July, in line with an initial estimate on Aug. 30. The dollar has depreciated 0.6 percent in the past week, the worst performer of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen has risen 0.8 percent, while the euro is little changed. The Aussie weakened after the minutes of the Reserve Bank of Australia’s last policy meeting on Sept. 3 released today indicated the central bank retains the option of reducing interest rates and said a further decline in the local currency would aid the economy.
