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By Bloomberg

Goldman Sachs Group Inc. said the dollar’s steepest tumble since 2011 won’t last and investors can profit if they buy it now as U.S. growth will pick up.

A gauge of the dollar fell last month for the first time since June. A 2.95 percent decline was the most for a month since October 2011. Lower-than-forecast data, including first- quarter gross domestic product, fueled speculation the Federal Reserve will keep U.S. interest rates lower for longer. Friday’s nonfarm payrolls is among the economic reports the data- dependent Fed uses to gauge the timing of a rate increase.

Goldman Sachs expects the world’s largest economy to grow 2.9 percent this quarter, after almost grinding to a halt in the first three months of the year. It joins strategists who expect the dollar to resume gains against major peers such as the euro, the yen and the Aussie on prospects the recent data deterioration will reverse, prompting the Fed to boost rates this year for the first time since 2006.

“Rate-hike expectations have been pushed too far out -- when these realign the dollar bull trend will resume, particularly against the yen, less so against pound and the euro,” said Thomas Averill, a managing director in Sydney at Rochford Capital, a currency and rates risk-management company.

The Bloomberg Dollar Spot Index, a measure of the U.S. currency against 10 major peers, fell 0.2 percent to 1,166.83 at 12:32 p.m. in Singapore after slipping 0.4 percent Tuesday when a report that showed the trade deficit expanded to the widest in more than six years. The gauge in March reached the highest since its 2004 start date.

Munch’s ‘Scream’

“After the perfect storm in March –- a dovish Fed and weak payrolls –- price action around last week’s GDP disappointment was a howl of disapproval, something akin to the ‘The Scream’ by Edvard Munch,” Goldman analysts, including Robin Brooks, the chief currency strategist in New York, wrote in the report. “Foreign exchange markets appear to be throwing a ‘tantrum’.”

The dollar will likely appreciate 18 percent to 95 cents versus the euro, and about 8 percent to 130 yen in 12 months, the analysts wrote. That’s more bullish than the consensus calls for the greenback to reach $1.03 per euro and 126 yen by March 31.

The dollar was little changed against the yen at 119.93. Japanese markets were closed Monday through Wednesday for national holidays. The euro added 0.4 percent against the greenback at $1.1224.

The U.S. economy grew at a 0.2 percent annualized pace in the first quarter after advancing at a 2.2 percent rate in the previous three months. U.S. employers added 230,000 workers to payrolls in April, according to the median forecast of economists surveyed by Bloomberg before the report on May 8. The 126,000 gain in March was the smallest in more than a year.

Bulls Resting

“The dollar has been in a consolidation phase in the past two months since it peaked in mid-March,” said Joseph Capurso, a strategist at Commonwealth Bank of Australia in Sydney. “I think the dollar bull trend will return when the market expects imminent U.S. rate hikes.”

Capurso estimates there will be very little labor market slack in the U.S. by the end of 2016, meaning the Fed needs to start tightening in 2015 because changes in monetary policy take more than a year to affect the economy.

Even after April’s slide, the dollar is the best-performing major developed currency over the past year, gaining 18 percent, according to Bloomberg Correlation-Weighted Indexes. The euro dropped 7.5 percent and the yen dropped 2.2 percent.