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FOREX-Dollar gains, but outlook suggests weak trend

ForexJan 12, 2019 02:00
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© Reuters. FOREX-Dollar gains, but outlook suggests weak trend

* Euro reverses gains vs dollar

* U.S. CPI falls in December

* Chinese yuan at 6-month high

* Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh (Adds analyst comment, updates prices)

By Gertrude Chavez-Dreyfuss

NEW YORK, Jan 11 (Reuters) - The dollar rose against the euro on Friday, boosted by technical factors after the single currency hit key resistance levels, even as the greenback's outlook remained bleak amid cautious signals from the Federal Reserve about further rate hikes.

"It seems like we're getting some model and stop-loss buying on the dollar after the euro hit resistance on the upside," said John Doyle, vice president of dealing and trading at Tempus Inc in Washington.

"The sharpest move was in euro/dollar and it has become this across-the-board buying of the dollar," he added.

That said, investors remained wary of pushing the dollar a lot higher.

This week's Fed minutes, which underscored the U.S. central bank's flexibility on monetary policy, triggered dollar selling that lifted the euro as high as $1.1581 and propelled it past a 100-day moving average for the first time in three months.

Greg Anderson, global head of FX strategy at BMO Capital Markets in New York, said the Fed's rate outlook was just one factor for the dollar's weakness so far in January.

The Fed chairman said on Thursday in a forum at the Economic Club of Washington that the U.S. central bank intends to shrink its balance sheet further, suggesting it is not done tightening monetary policy just yet.

Markets, however, are pricing in no further rate hikes by the Fed this year.

Data showing U.S. consumer prices in December fell for the first time in nine months in December had little impact on the market, but it backed the Fed's cautious stance about raising rates this year. from the Fed's dovish rate outlook, Shaun Osborne, chief FX strategist, at Scotiabank in Toronto, cited cyclical, structural and secular trends, which could also pressure the dollar in 2019.

"The outlook for relative central bank policy has reached its climax in terms of offering the U.S. dollar support, and widening fiscal and current account deficits are expected to deliver medium-term weakness in the currency," Osborne said.

In afternoon trading, the dollar index rose 0.1 percent to 95.660 .DXY , but posted its fourth straight weekly decline.

The euro fell 0.3 percent to $1.1465 EUR= .

The dollar was also slightly higher versus the yen at 108.48 yen JPY= , and up versus the Canadian dollar, which fell 0.3 percent CAD= . The greenback last traded at C$1.3272.

In other trading, the Chinese yuan CNY=CFXS rose to its highest level since late July against the dollar, as China and the United States extended trade talks in Beijing. China also gave recent assurances of further fiscal boosts to its slowing economy, lifting the yuan as well.

========================================================

Currency bid prices at 3:04PM (2004 GMT) Description

RIC

Last

U.S. Close Pct Change

YTD Pct

High Bid

Low Bid

Previous

Change

Session

Euro/Dollar

EUR=

$1.1464

$1.1498

-0.30%

-0.04%

+1.1540

+1.1458 Dollar/Yen

JPY=

108.4900

108.4200

+0.06%

-1.61%

+108.5900 +108.1500 Euro/Yen

EURJPY=

124.38

124.68

-0.24%

-1.46%

+124.9900 +124.2400 Dollar/Swiss

CHF=

0.9841

0.9842

-0.01%

+0.28%

+0.9856

+0.9815 Sterling/Dollar GBP=

1.2843

1.2747

+0.75%

+0.67%

+1.2865

+1.2711 Dollar/Canadian CAD=

1.3273

1.3234

+0.29%

-2.67%

+1.3274

+1.3183 Australian/Doll AUD=

0.7204

0.7185

+0.26%

+2.20%

+0.7235

+0.7183 ar

Euro/Swiss

EURCHF=

1.1283

1.1320

-0.33%

+0.26%

+1.1340

+1.1273 Euro/Sterling

EURGBP=

0.8923

0.9015

-1.02%

-0.68%

+0.9061

+0.8925 NZ

NZD=

0.6831

0.6778

+0.78%

+1.70%

+0.6843

+0.6781 Dollar/Dollar

Dollar/Norway

NOK=

8.5322

8.4777

+0.64%

-1.23%

+8.5390

+8.4447 Euro/Norway

EURNOK=

9.7832

9.7497

+0.34%

-1.24%

+9.7893

+9.7367 Dollar/Sweden

SEK=

8.9322

8.9035

-0.02%

-0.35%

+8.9441

+8.8600 Euro/Sweden

EURSEK=

10.2400

10.2420

-0.02%

-0.23%

+10.2560

+10.2090

FOREX-Dollar gains, but outlook suggests weak trend
 

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