Dollar falls as global growth worries ease

NEW YORK: The dollar declined against a basket of currencies on Monday as recent strong economic data eased worries about the global economy, prompting investors to reduce safe-haven positions in the greenback.

The euro moved further above a one-month low reached last week as investors squared positions before a European Central Bank meeting this week.

Sterling rebounded from a one-week low versus the dollar. Investors were watching whether British Prime Minister Theresa May could convince the European Union to again postpone her country's exit from the bloc.

"It's that expectations for global growth have bottomed. It's more than green shoots have emerged," said Paresh Upadhyaya, director of currency strategy at Amundi Pioneer Investment Management in Boston.

Encouraging economic data last week from China and the United States boosted market sentiment, lifting growth-oriented currencies like the Austrialian and New Zealand dollars, Upadhyaya said.

At 2:42 p.m. (1842 GMT), an index that tracks the dollar versus the euro, yen, sterling and three other currencies was down 0.35% at 97.056.

"We are neutral on the US dollar," Richard Turnill, BlackRock's global chief investment strategist wrote in a research note. "It has perceived 'safe-haven' appeal but gains could be limited by a high valuation and a narrowing growth gap with the rest of the world."

Such a view on the dollar spurred buying in other currencies on Monday.

The euro was up 0.38% at $1.12605 after hitting $1.11830 last Tuesday, which was the lowest since March 8. The single currency rose to a two-week high at 125.575 yen.

Traders cut long euro positions last week by the most in nine months, data showed, as core European bond yields entered negative territory and PMI data indicated the euro zone economy was struggling.

No policy changes are expected at this week's ECB meeting, but the press conference afterward will be in focus amid talk of tiered rates, global recession fears and a sense of alarm that pushed 10-year German bond yields below zero percent for the first time since 2016.

The Australian dollar was up 0.31% at $0.7128 in the wake of declining prices of commodities such as copper.

The pound rose further from a one-week low. May is seeking a compromise with Labour Party leader Jeremy Corbyn to attain parliamentary approval for a Brexit deal and to support an agreement to delay Britain's departure until the end of June. Sterling was up 0.25% at $1.3068.