The dollar weakened the most in almost a year, dropping from a four-year high, as uneven U.S. labor-market data refueled the debate over when the Federal Reserve will raise interest rates.

The greenback depreciated versus most of its 31 major peers, with Brazil’s real climbing the most in three years as President Dilma Rousseff faces a runoff against surprise second- place candidate Aecio Neves. The yen strengthened from almost its weakest since 2008 before the Bank of Japan’s policy decision tomorrow. South Africa’s rand gained the most in almost two months after Deputy Reserve Bank Governor Lesetja Kganyago was announced to lead the central bank.

“The dollar’s been very vulnerable to a correction,” said Mark McCormick, a foreign-exchange strategist in New York at Credit Agricole SA. “Given the economic fundamentals and given the landscape of what we’ve seen over the past few months in terms of where U.S. data’s playing out and where the U.S. rates story’s headed, I think the dollar’s definitely overshot.”

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major currencies, fell 0.8 percent to 1,070.35 at 2:16 p.m. in New York, the biggest drop since Oct. 17, 2013. It closed at 1,078.65 on Oct. 3, the highest since June 2010.

The gauge’s 14-day relative strength index was 69, just below above the 70 level that signals to some traders that gains have been excessive and may be poised to reverse, after rising to as high as 86 last week.

The yen gained 0.7 percent to 108.99 per dollar after reaching 110.09 on Oct. 1, the weakest since August 2008. The greenback slipped 0.8 percent to $1.2615 per euro after touching $1.2501 on Oct. 3, the strongest level since August 2012. The 18-member common currency traded at 137.44 yen.

Brazil Election

Brazil’s real added as much as 3.6 percent, the most since September 2011, as Neves, a candidate favored by investors, will face a runoff with Rousseff in the next round of presidential elections on Oct. 26.

South Korea’s won lost the most, sliding to a six-month low of 1,071.63 per dollar.

The rand strengthened as much as 1.1 percent, the most on an intraday basis since Aug. 8, as Kganyago, one of two favored candidates, was named to succeed Governor Gill Marcus next month.

Sweden’s krona gained versus the euro and the Norwegian krone after Sweden’s largest food retailer ICA Gruppen AB sold a unit to Coop Norway. The krona advanced 0.2 percent to 9.0896 per euro and strengthened 0.5 percent to 1.1094 per Norwegian krone.

Factory Orders

The euro advanced against the U.S. currency, three days after touching a two-year low, even as German factory orders fell the most since 2009. Orders, adjusted for seasonal swings and inflation, fell 5.7 percent in August, the Economy Ministry in Berlin said today. Analysts predicted a 2.5 percent decline, according to the median estimate in a Bloomberg News survey.

The yen strengthened as the Bank of Japan, which buys about 7 trillion yen ($64 billion) of government bonds a month, started a two-day meeting today.

While BOJ Governor Haruhiko Kuroda said last week that he doesn’t think a weak yen is bad for the Japanese economy overall, Prime Minister Shinzo Abe today said the government will watch for effects of the currency’s decline and take measures.

Fed Dilemma

Fed Chair Janet Yellen’s dilemma over when to raise borrowing costs wasn’t made any clearer by conflicting employment data on Sept. 3.

While the U.S. jobless rate declined to a six-year low in September, the participation rate, which measures the number of Americans employed or looking for a job as a share of the working-age population, fell to the lowest level since February 1978. Average hourly earnings were unchanged.

“The market will want to reassess the speed with which the Fed will be moving,” Valentin Marinov, Citigroup Inc.’s London- based head of European Group of 10 currency strategy, said in an interview on Bloomberg Television’s “On The Move” with Jonathan Ferro. “The Fed is moving towards the exit, will be hiking rates before long, and that should, over the longer term, continue to support the dollar.”

‘Big Journey’

The Fed is on track to end stimulatory bond purchases that supported the U.S. economy through the recession, and is considering timing for the first interest-rate increases since 2006. The central bank releases minutes from its Sept. 16-17 meeting on Oct. 8. It convenes again on Oct. 29.

The dollar has jumped 7 percent in the past three months, the best performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen weakened 0.6 percent and the euro declined 1.7 percent.

For the dollar, “it’s a big journey in a few days, so I expect things to maybe slow down just a little bit until we get another catalyst,” said Fabian Eliasson, who works in foreign- exchange sales at Mizuho Financial Group Inc. in New York. “The Fed’s being fairly data dependent here. If things improve dramatically, it will be hard to defend not doing anything.”