EU focus: Dollar hits fresh 16-month low

The dollar hit a fresh 16-month low against a basket of currencies on Thursday as expectations grew the Federal Reserve would keep its loose monetary policy, widening interest rate differentials in favour of higher-yielding currencies.


The tone for the dollar remained weak after Wednesday's U.S. retail sales data and the Fed's Beige Book report did nothing to change the view the central bank would keep its $600 billion asset buying programme until June.
In contrast, the European Central Bank is expected to follow up its April interest rate hike with more tightening later this year, a factor keeping the single currency near a 15-month peak against the dollar.
The dollar index fell to 74.676, bringing its losses this year to around 5%.
"The fact that the U.S. recovery is continuing will not become a trigger point for Fed policy," said Masafumi Yamamoto, chief FX strategist at Barclays Capital.
"Unemployment, although improving, is still relatively high and the Fed is not going to bring forward the end of its loose monetary policy. The dollar is finding no fresh factors to rise on."