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By Bloomberg

The dollar pared monthly gains that have sent it toward the longest winning streak in at least a decade, before a government report analysts said will show growth in U.S. gross domestic product slowed.

The Bloomberg Dollar Spot Index has advanced 2.9 percent in January amid speculation the Federal Reserve is the only developed-nation central bank considering raising interest rates this year. The yen climbed versus all of its 16 major counterparts as a government report showed Japanese industrial production rebounded in December. Asia’s emerging-market currencies are set for the longest run of declines since the region’s financial crisis in 1998.

“Fourth-quarter U.S. GDP could come out a lot worse, pushing down the dollar,” Takeru Kurokawa, an analyst in Tokyo at Ueda Harlow Ltd., which provides margin-trading services, wrote in a note to clients.

The Bloomberg Dollar Spot Index, a gauge of the currency’s performance against 10 major peers, fell 0.1 percent to 1,164.22 at 8:59 a.m. in London after closing at 1,165.60 on Thursday, the highest in data going back to 2004. It has climbed 16 percent since the end of June and is set for its seventh monthly advance, the longest streak in a decade.

The yen strengthened 0.2 percent to 133.70 per euro, heading for its second monthly gain, adding 8.4 percent. The dollar slid 0.4 percent to 117.86 yen and declined 0.2 percent to $1.1339 per euro.

Annual economic growth in the U.S. slowed to 3 percent in the fourth quarter, from 5 percent in the previous three months, according to a Bloomberg News survey of analysts before the government report on Friday in Washington.

U.S. Growth

The dollar has gained 16 percent in the past six months, the best performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro has declined 3.7 percent and the yen has fallen 0.3 percent.

Central banks in Canada, Switzerland and Singapore shocked currency traders with surprise policy announcements this year, sending volatility higher. The euro plunged last week as the European Central Bank introduced a bond-buying program that was bigger than forecast. Danish policy makers on Thursday cut borrowing costs for the third time in 10 days, while Turkish officials said they may hold an emergency meeting next week to lower interest rates.

JPMorgan Chase & Co.’s global gauge of currency price swings climbed to as high as 11.68 percent this month, the most since June 2013, and was 10.95 percent on Jan. 30.

Dovish Policy

While other central banks become more dovish, the U.S. is headed in the opposite direction with the Fed raising its assessment of the economy and playing down low inflation at a two-day meeting that ended Wednesday.

Fed officials have kept their interest-rate target in a range of zero to 0.25 percent since December 2008. The chance of an increase to at least 0.5 percent by the Fed’s December meeting is about 67 percent, futures data show.

“Speculation the Fed will raise rates is spurring a strong-dollar mood,” said Daisaku Ueno, chief currency strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. “The market is shifting away from the dollar-yen pair to other currencies to trade on the dollar’s strength.”

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, is set to drop 0.5 percent in January in a fifth month of declines.

Yen Gain

In contrast, the yen is headed for its first monthly gain against the dollar since June, rising 1.6 percent. Japan’s trade ministry data on Friday showed industrial production snapped two quarters of decline, signaling the world’s third-largest economy may have limped out of recession.

Australia’s dollar halted a two-day decline versus the greenback that saw it tumble the most in three months on Thursday as traders increased bets that the nation’s central bank will cut interest rates next week.

The currency was little changed at 77.64 U.S. cents after touching 77.20 cents on Thursday, its lowest since 2009. The New Zealand dollar held a drop since Jan. 27, trading little changed at 72.68 U.S. cents after sliding to its lowest since March 2011 at 72.34 cents on Thursday.

Traders see a 70 percent chance the Reserve Bank of Australia will lower rates at this year’s first policy meeting on Feb. 3, up from 27 percent odds on Dec. 31, according to overnight interest-rate swaps.