The dollar slumped the most since October 2011 after the Federal Reserve reduced projections for interest-rate increases and expressed concern the dollar’s surge is weighing on exports and inflation.
The U.S. currency fell against all of its 16 major peers as banks including HSBC Holdings Plc said the 20 percent surge since August is coming to an end. Economic reports next week may show inflation remains below the Fed’s target, giving the central bank more room to maneuver.
“You always have to be careful with foreign exchange -- it can move very quickly and you can’t imply anything from previous trends,” Charles St-Arnaud, senior economist at Nomura Securities International Inc., said by phone from London. “That’s what happened to the U.S. dollar.”
The Bloomberg Dollar Spot Index fell 2.2 percent this week to 1,195.01 in New York. The gauge is up 1.9 percent this month and 5.7 percent this year.
The greenback slumped 3.1 percent this week to $1.0821 versus the euro, and fell 1.1 percent to 120.04 yen.
Hedge funds trimmed their bullish dollar futures positions to the least since December, according to Commodity Futures Trading Commission data. Net futures position betting on a stronger greenback versus eight major peers in this category reached a record 448,675 contracts in January.