The dollar tumbled broadly on Friday after weak US economic data dragged the 10-year Treasury yield down to a six-month low overnight, with the greenback's drop gaining steam on a flurry of stop-loss selling. The dollar fell across the board, hitting a record low against the Swiss franc and a three-year low versus the New Zealand dollar, with traders citing talk of dollar selling by model funds and US banks, as well as Asian sovereign players.
The dollar also retreated against emerging Asian currencies such as the Singapore dollar, and slid 0.6 percent versus a basket of major currencies to 75.107, pulling away from a two-month high of 76.366 hit earlier this week. The dollar had rallied earlier in May after a rout in commodities such as silver and oil spooked investors, prompting them to unwind dollar-funded bets on risky assets.
"Market players had flocked to dollar buying, based on the view that the dollar tends to rise when investors are looking to avoid risk," said Kimihiko Tomita, head of foreign exchange for State Street Global Markets in Tokyo. "But I think the market got a bit too carried away with that theme," Tomita said. The dollar hit a record low against the Swiss franc of 0.8534 francs on trading platform EBS, and was last down 1 percent at 0.85740.
The New Zealand dollar marked a three-year high of $0.8200, coming within a whisker of a 26-year peak of $0.8215 hit in March 2008. It was last up 1.1 percent at $0.8186. The euro climbed 0.7 percent to $1.4244, its rise having gained momentum after hitting stops above the previous day's high near $1.4207.
A drop in US Treasury yields on Thursday dented the dollar, giving the single currency some respite from a recent sell-off on worries over the possibility of debt restructuring by Greece, which had sent the euro down to a two-month low of $1.3968 earlier this week.
"The dollar has been strong since the start of May but it looks like that outperformance may be coming to a close," said Junya Tanase, foreign exchange strategist at J.P. Morgan Chase in Tokyo. The euro has turned higher after its drop this week stalled right near its 100-day moving average and also the bottom of the cloud on daily Ichimoku charts, a form of Japanese technical analysis popular among market players.