U.S. dollar hits lowest level in 10 days on Thursday

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U.S. dollar hits lowest level in 10 days on Thursday

Graphic: World FX rates https: tmsnrt.rs 2 RBWI 5 E Updates headline with new record, adds detail about dollar move, update prices, adds Swedish crown and Norwegian crown LONDON, Oct 14 - Reuters - The dollar edged against major peers on Thursday, reaching its lowest level in 10 days in a pullback from the recent rally.

Expectations that the U.S. Federal Reserve would tighten monetary policy more quickly than previously expected have helped the dollar rise since early September.

But its ascent eased recently and a hike was on track for its second biggest two-day drop so far this year, even after minutes of the Fed's September meeting confirmed tapering of stimulus is likely to start this year.

It seems to be a classic case of sell the fact type mentality, said Neil Jones, head of FX sales at Mizuho.

The Fed confirmed the expectations of many investors holding large dollars positions that I would suggest. It's just a situation of liquidating longs - profit-taking of long dollar positions since Fed tightening is now somewhat factored into the price. At 0913 GMT the dollar index was down 0.2% on the day to 93.794, its lowest since Oct 4. On Tuesday, it hit a one-year high at 94.563.

The euro was up 0.2% to $1.1619, a nine-day high.

A Labor Department report showed U.S. consumer prices rose solidly in September, and are likely to rise further amid a surge in energy prices, potentially pressing the Fed to act sooner to normalise policy

The September meeting minutes from the Fed showed that a growing number of policymakers were worried that high inflation could persist.

Mizuho's Jones said, "My expectation is that this dollar weakness will not last and we got back into a longer-term bull trend".

U.S. individual jobless claims and PPI data are due later in the day or week.

Today's PPI data is a reminder that the Fed needs to be more vigilant about inflation, wrote ING strategists in a note to clients.

The Swedish inflation picked up to its highest level since November 2008, prompting the Swedish crown to extend gains and reach its highest level in eight months against the euro.

At 0914 GMT, the Swedish currency was down 0.5% against the euro at 10.0175.

The Norwegian crown also strengthened, with the Nokkie getting 0.6% against the Euro exchange rate at 9.7828.

Simon Harvey, Senior FX Analyst at Monex Europe, said that the Swedish crown reload was not only part of the rebound in riskier currencies, but that the inflation data contributed to the move.

The Australian Dollar, which is seen as a liquid proxy for risk appetite, was up 0.5% against the dollar at $0.74175 The currency brushed off data showing a drop in jobs numbers, with investors betting on a quick recovery since lockdown measures eased.

The New Zealand dollar rose also, to a maximum of 0.8% at $0.70245, highest in two years.

The Swiss franc is up around 0.2% against the euro Around 0600 GMT, it reached its highest in 11 months versus the euro, a move which Mizuho's Jones said could be due to a combination of risk-aversion in global markets and more broad-based Euro weakness.

Turkey's lira retreated losses, pulling back from record low it touched overnight after President Tayyip Erdogan dismissed three members of the central bank and monetary policy committee.

The cryptocurrency bitcoin was about $57,622, although bitcoin was actually decentralized in the US. Earlier in the session, it reached a five-month high of $58,550 A collapse in Cryptocurrencies is a plausible scenario and regulations are needed to regulate the fast-growing sector as a matter of urgency Bank of England Deputy Governor Jon Cunliffe said on Wednesday.