26.07.201306:03:35UTC+00Dollar declines on bets fed won't taper purchasing soon; Kiwi bolsters

The dollar decline against 15 of its 16 most-traded counterparts on assumption the Federal Reserve will reassure investors that policy makers won’t be quick to increase interest rates at next week’s meeting.

New Zealand’s dollar climbed the most in more than a year against its U.S. counterpart after central-bank Governor Graeme Wheeler said a removal of financial easing “will likely be needed in the future.” The U.S. currency extended losses after the Wall Street Journal’s Jon Hilsenrath wrote that the Fed will probably keep its bond-purchasing program unaltered next week.

Kiwi Advances

New Zealand’s dollar, nicknamed the kiwi, soared against all of its 16 major counterparts after the nation’s Reserve Bank said the pace of future interest-rate increases will depend on the growing housing market’s impact on prices, while reiterating it will keep borrowing costs at a record-low 2.5 percent this year.

Options Trading

Trading in over-the-counter foreign-exchange options totaled $27 billion, compared with $23 billion yesterday, according to data reported by U.S. banks to the Depository Trust Clearing Corp. and tracked by Bloomberg. Volume in options on the dollar-yen exchange rate amounted to $9.4 billion, the largest share of trades at 34 percent. Options on the euro-dollar rate totaled $3.1 billion, or 11 percent.

Dollar Gauge

The Bloomberg Dollar Index remained lower today after the Commerce Department said orders for U.S. durable goods climbed 4.2 percent last month, led by transportation equipment. A Bloomberg survey forecast a 1.4 percent gain.

Yen’s Backslide

The currency has slumped 8.3 percent this year against the dollar as Prime Minister Shinzo Abe and Bank of Japan Governor Haruhiko Kuroda have pushed to stem deflation and trigger growth.

The yen depreciated 3.5 percent in the past month, the largest retreat among 10 developed-market counterparts tracked by Bloomberg Correlation-Weighted Indexes. The euro bolstered 0.4 percent, while the dollar surrendered 1.8 percent.

The euro backed down earlier versus the greenback amid speculation that developong data won’t derail European Central Bank President Mario Draghi’s pledge to keep interest rates low for an extended period. The ECB next meets Aug. 1.

The Munich-based Ifo institute’s business climate index, based on a survey of 7,000 German executives, rose to 106.2 this month from 105.9 in June, data showed today. A Bloomberg survey predicted a gain to 106.1.

The index “points to a moderate upturn in German growth, which makes extra stimulus unnecessary,” Christian Schulz, an economist at Berenberg Bank in London, wrote in a note to clients. “At the same time, the moderate pace should not raise pressure for quick monetary tightening. It thus supports the ECB’s guidance that interest rates will stay at or below their current levels for an extended period.”