Article Highlights

  • Dollar hits lowest since Oct. vs yen, Sept. vs Swiss franc
  • U.S. durable goods orders miss after strong three-month run
  • Dollar falls vs safe-havens, emerging markets currencies
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The dollar fell on Wednesday, touching its lowest level in more than a month against the Japanese yen and the Swiss franc after the release of weaker-than-expected U.S. data and inflation expectations.

New orders for U.S.-made capital goods unexpectedly fell in October after three straight months of strong gains and a measure of goods orders that strips out volatile components had its biggest drop since September 2016.

The dollar fell to 111.62 yen, its lowest since Sept. 26. Against the Swiss franc, the dollar fell to its lowest since Oct. 20, hitting 0.9827 franc.

The euro rose to a session high against the dollar of $1.1796.

The University of Michigan’s consumer sentiment report showed a decline in expectations for long-term inflation.

“The pressures started early and then the data contributed to that, first in terms of the durable goods orders … and lastly on the dip in long-term inflation expectations in the Michigan survey,” said Vassili Serebriakov, FX strategist at Credit Agricole.

Federal Reserve Chair Janet Yellen spoke Tuesday night and sounded less certain about the pace of U.S. inflation.

The dollar also was weighed by technical trading factors, as speculators have begun to reverse bearish bets that the yen will depreciate as the year moves towards a close. Additionally, the dollar/yen currency pair fell below the 38.2 percent Fibonacci retracement level for 2017, an important indicator that prompts technical traders to move positions.

Last week, speculators’ net short position in the yen grew to its largest since December 2013 as traders continued to bet that the yen would fall.

Analysts said the low volume in markets ahead of the Thanksgiving holiday in the United States on Thursday was exaggerating moves.

The dollar also fell broadly against emerging markets currencies such as the South African rand, Chinese yuan , Brazilian real and Russian rouble.

BMO’s global head of foreign exchange strategy, Greg Anderson said the the dollar’s weakness against riskier currencies from emerging market countries and safe-haven currencies like the yen and franc suggested that the dollar’s recent resurgence is coming to an end.

He said he sees the dollar falling to 110 yen per dollar by year end and would not be surprised to see it fall below that.

“We should be back to U.S. dollar weakness a little bit into December and even more-so early next year,” Anderson said. “That’s just what happens when you have strong global growth is you get U.S. dollar weakness.”