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By Bloomberg

The dollar’s best start to a year in at least a decade is unwinding as the currency heads for a fifth- straight April of declines. The drop has been spurred by concern the Federal Reserve will delay raising interest rates.

The Bloomberg Dollar Spot Index slid for five days through Tuesday before the Federal Open Market Committee announces a policy decision and data forecast to show the U.S. economy grew last quarter at the slowest pace in a year. The greenback has surged 17 percent from a year ago as the Fed stands alone among major peers in considering an increase in borrowing costs. Australia’s dollar was near a three-month high as traders pared bets its central bank will loosen policy next week.

“The big sell-off in the U.S. dollar that we’ve seen over the last few weeks has reflected how long the market was,” said Thomas Averill, a managing director in Sydney at Rochford Capital, a currency and rates risk-management company. “I’d probably be leaning towards more of a pause in the dollar-bull trend rather than a complete reversion of it.”

The Bloomberg Dollar index, which tracks the greenback against 10 major peers, was little changed at 1,172.07 as of 11:51 a.m. in Tokyo, after slipping 0.6 percent on Tuesday. It completed its longest stretch of declines since July on Tuesday as a measure of consumer confidence was the latest indicator to trail projections.

The index, which reached the highest on record on March 13 since its 2004 start date, is down 2.4 percent since March 31 and last recorded a gain in the month of April in 2010.

The dollar was little changed at 118.87 yen, after dropping 0.2 percent on Tuesday, and gained 0.1 percent to $1.0969 per euro.

Weaker Economy

A report Wednesday is forecast to show U.S. gross domestic product expanded an annualized 1 percent in the three months through March 31, according to the median estimate of 79 analysts surveyed by Bloomberg. The FOMC will release a statement the same day after concluding a two-day meeting.

Fed officials have said their decision to raise interest rates will be data-dependent. With recent economic reports coming below forecasts, the Fed will wait until September to increase borrowing costs, according to 73 percent of 59 economists surveyed by Bloomberg last week.

The Aussie fell 0.4 percent to 79.91 U.S. cents, after advancing for the past five days on the back of rising iron ore prices.

The currency topped the 80 cents level on Tuesday for the first time in three months amid speculation that the Reserve Bank of Australia is less likely to reduce its key interest rate from a record-low 2.25 percent, Greg Moore, a senior currency strategist at Royal Bank of Canada in Toronto, wrote in a note Wednesday. Growing expectations of easier policy in China also contributed to the advance, he wrote.

“Market-implied expectations for the next few RBA meetings have only marginally changed,” Moore wrote in the report, saying the probability remains “roughly 50-50.”

“The rest of the curve shows notably lower pricing for cuts into next year,” he said.