Dollar drops against yen as risk-off mood persists

The dollar weakened against its main rivals Wednesday after a spate of weak economic data and the Federal Reserve’s Beige Book painted a troubling picture of the U.S. economy.

The ICE U.S. Dollar Index DXY, +0.12% a measure of the dollar’s strength against a basket of six rival currencies, was down 0.5% to 94.2800.

U.S. producer prices fell 0.5% in September, outpacing an expected decline of 0.2% from a survey of economists conducted by MarketWatch, while retail-sales increased by just 0.1% in September. A measure of retail sales in August was revised lower to show no change.

The Fed’s Beige Book, a collection of anecdotes from business leaders in each of the Fed’s 12 regions, indicated some slowing in the economy.

Emerging-markets currencies also put in a strong performance Wednesday, with several — including the Brazilian real USDBRL, -0.0525% South African rand USDZAR, -0.2130%  and the Turkish lira USDTRY, -0.0686% — rising nearly 2% against the dollar.

“The combination of [the retail sales and PPI] and the pretty awful data we’ve seen thus far in September is pushing back when the Fed will hike, lowering the odds of December and raising the odds of 2016,” said Mark McCormick, a global FX strategist based in New York.

The U.S. currency was slightly weaker against the euro EURUSD, -0.0349% which rose to $1.1473, up 0.8% from $1.1378 late Tuesday in New York — its highest level since Sept. 18, according to FactSet data.

The greenback USDJPY, +0.25%  was at ¥118.75, down 0.8% from ¥119.74 Tuesday, its weakest level since Oct. 2.

Concerns about stubbornly low inflation and deteriorating jobs growth caused two voting members of the Fed’s rate-setting committee — Fed Governors Lael Brainard and Daniel Tarullo — to warn against a premature rate increase during speeches earlier this week. While Brainard refused to speculate about timing, Tarullo said outright that he doesn’t expect the Fed to hike in 2015.