SINGAPORE – The dollar retreated on Wednesday on fresh signs of a US slowdown after orders for core capital goods fell more than expected in March, while the economic outlook for Europe could surprise to the upside and strengthen the euro.
The Swedish crown weakened sharply after the country’s central bank was less hawkish than expected, while the euro rebounded 0.6 from losses on Tuesday when jitters over US banks buoyed the safe-haven dollar.
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The dollar index , which measures the currency against six major rivals, fell 0.354 as new orders for key US-manufactured capital goods fell more than expected last month, the Commerce Department said.
Unfilled orders continued a steady decline, indicating there was less in the pipeline to drive activity and that business spending on equipment was likely a drag on first-quarter growth.
Meanwhile, Germany raised its economic forecast for growth this year to 0.4 from a previously predicted 0.2 , according to government spring economic projections published on Wednesday.
“Europe is taking a lot of people by surprise,” said Ed Moya, senior market analyst at OANDA in New York. “There’s still a lot of risks for their economy, their outlook. But this is still a market that is rather stunned by what we’re getting out of Europe.”
Driving the dollar versus major currencies are early signs of a US slowdown and decelerating inflation that will be greater than other economies, said Thierry Wizman, global FX & interest rates strategist at Macquarie in New York.
“Whatever slowdown we’re going to see in the US is going to come earlier and it’s going to be more intense, at least in its early stages, than whatever we’re going to see coming out of the rest of the world,” Wizman said.
“The disinflation that we’re seeing or going to see in the US in final goods and services prices, is going to be more intense, more significant, than whatever disinflation that we get in the rest of the world,” he said.
