2013.07.2606:00:08UTC+00Dollar set for weekly decline against counterparts before fed meeting, GDP

The Dollar Index pulled back, continuing a third straight weekly retreat, on speculation the Federal Reserve will reassure investors that policy will stay accommodative at next week’s assembly.

The U.S. currency has declined against 15 of its 16 major counterparts since July 19 before reports next week predicted to show economic progress in the second quarter and jobs surge in July slowed. A Wall Street Journal article yesterday said the Fed is likely to revise its guidance on rates when policy makers meet July 30-31. The yen briefly slumped after Japan’s consumer prices excluding fresh food increase in June by the most since November 2008.

‘Too Early’

The Federal Open Market Committee is scheduled to meet July 30-31 and won’t announce a decision to reduce its monthly bond purchases at that meeting. Half of those polled said Fed Chairman Ben S. Bernanke will trim bond buying to $65 billion from the current pace of $85 billion in September.

Consumer Confidence

The Thomson Reuters/University of Michigan final index of consumer sentiment due today is forecast at 84 in July, up from the 83.9 preliminary reading.

“The dollar will be more vulnerable to downside surprises in the data, because bullish positions have been built up so much,” said Noriaki Murao, a New York-based managing director of the marketing group at the Bank of Tokyo-Mitsubishi UFJ Ltd.

The greenback has fallen 1.9 percent in the past month, paring to 4.1 percent its advance since Dec. 31, Bloomberg Correlation Weighted Indexes show. The yen has dropped 3.3 percent since June 25, the biggest decline among the 10 currencies tracked, while the euro has risen 0.4 percent.

The yen erased gains today after Japan’s statistics bureau said consumer prices excluding fresh food rose 0.4 percent from a year earlier in June.

“The CPI report fueled optimism that the Bank of Japan’s stimulus may be working and spurred a bit of yen selling,” said Yuji Saito, the director of foreign-exchange at Credit Agricole SA (ACA)in Tokyo. “Still, achieving the central bank’s 2 percent inflation target is a long way off, and that’s limited the reaction in the market.”

BOJ Governor Haruhiko Kuroda doubled monthly bond purchases to more than 7 trillion yen ($70 billion) in April to try to defeat deflation that has weighed on consumer spending and corporate profits. Policy makers are targeting a 2 percent annual increase in the cost of living in two years.