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By Bloomberg

The dollar declined, extending weekly losses against its major counterparts, as signs of slowing momentum in the U.S. economy undermined the prospects of an early increase in interest rates.

The greenback fell versus all of its 16 major peers this week after below-forecast readings for American housing, factories and retailers added to concern about the labor market. Australia’s and New Zealand’s currencies advanced this week as crude oil headed for its biggest weekly gain in more than four years.

“We have been seeing some consolidation given the weaker tone to the U.S. data, a lot of the appreciation we have seen has petered off,” said Phyllis Papadavid, a senior foreign- exchange strategist at BNP Paribas SA in London. “The uptrend will resume and it will coincide with an improvement in second- quarter data. We are still sticking with our forecast of parity in euro-dollar by the end of the year.”

The dollar weakened 0.5 percent to $1.0810 per euro as of 8:31 a.m. New York time, extending this week’s decline to 1.9 percent. The greenback depreciated 0.1 percent to 118.91 yen, having slipped 1.1 percent since April 10.

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, headed for a 1.8 percent drop this week, falling to 1,182.46 Friday.

Steepest Declines

The U.S. dollar’s biggest declines versus its developed- nation peers this week came against so-called oil currencies, with losses of 4.3 percent against Norway’s krone and 3.9 percent versus Canada’s loonie.

“The market is primed now to weaken the dollar,” said Stuart Bennett, head of Group-of-10 currency strategy at Banco Santander SA in London. “Once you lose momentum, then a lot of people are thinking maybe we shouldn’t see this as a one-way bet.”

Seventy-one percent of participating economists surveyed by Bloomberg forecast the Federal Reserve’s first rate increase in almost a decade will come at its September meeting. That’s up from 32 percent in last month’s survey. The camp calling for a June move shrank to 12 percent from 45 percent in March.

Fed officials are divided about the timing, with Vice Chairman Stanley Fischer saying they can’t keep interest rates at a record low forever, while Atlanta President Dennis Lockhart said he wanted to see both falling unemployment and rising inflation prior to the first increase.

U.S. indicators have been undershooting analysts’ estimates since the start of this year, according to the Bloomberg Economic Surprise Index, which dropped on Thursday to the lowest level since March 2009.

“The way the market is currently sitting, it’s more inclined to react to those data disappointments rather than any positive data,” said Kymberly Martin, a markets strategist in Wellington at Bank of New Zealand Ltd.

Even so, the dollar is off to its best start to any year in at least a decade, rising 4.6 percent according to the Bloomberg index.