FOREX-Dollar hovers near one-month low as strong euro, stock rally weigh

  • 10/29/2021
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* Euro buoyed as ECB’s dovish signals seen not strong enough * Wall Street record highs sap demand for safe-haven dollar * New Zealand dollar sags after dip in consumer confidence * Ether rises to record high; bitcoin trades near $61,200 TOKYO, Oct 29 (Reuters) - The dollar hovered near its weakest level in a month against major peers on Friday, hurt by a stronger euro as traders bet on earlier European interest rate increases and as an equity rally sapped demand for safer assets. New Zealand’s dollar sagged amid a slide in consumer confidence, while ether, a cryptocurrency, climbed to a record high. The dollar index, which measures the currency against six main rivals, including the euro, edged up 0.1% to 93.462, but remained close to Thursday’s low at 93.277 - a level not seen since Sept. 27. The euro slipped 0.1% to $1.1666 after rising as high as $1.1692 overnight for the first time since Sept. 28. Against the yen, another traditional safe haven, the dollar was mostly unchanged at 113.595, continuing to ease back gradually from the almost three-year high of 114.695 reached last week. An index of global shares rose to the cusp of a record peak this week, powered by an earnings-driven rally to consecutive record highs on Wall Street, including overnight. The euro was lifted on Thursday after comments by European Central Bank President Christine Lagarde were interpreted in some quarters as not going far enough in affirming the central bank’s dovish stance. Lagarde’s “pushback was not forceful enough,” opening the way for the euro to test $1.1680 in the near term, TD Securities strategists wrote in a note. However, “extrapolating (euro strength) beyond that seems like a big ask a week ahead of the Fed’s meeting, where taper will be announced,” they said. The U.S. Federal Reserve ends a two-day meeting on Wednesday and is widely expected to begin to pare back stimulus, with interest rate lift-off next year. Traders will have their eyes on economic gauges from both regions later in the day, with Europe seeing a preliminary reading of the consumer price index, while the U.S. gets personal spending and income data. Foreign-exchange markets have become volatile around central bank activity. Big moves began Wednesday with hawkish comments from the Bank of Canada. And for a second day on Friday, the Reserve Bank of Australia opted not to suppress a rise in the yield of a bond at the heart of its stimulus program, leading analysts and traders to predict policymakers will abandon their yield control programme at a meeting on Tuesday. “The difficulty for the RBA is that this will also require a change in their forward guidance on the expected timing of the first rate hike,” Commonwealth Bank of Australia strategist Carol Kong wrote in a report. “We doubt the RBA will be able to match current market pricing, which is priced for a rate hike in early 2022, but an indication from the RBA that inflation pressures may be building earlier than anticipated and that rate hikes are now likely before 2024 could be expected.” The Australian dollar eased 0.1% to $0.7537, after reaching the highest since early July at $0.75555 in the previous session. The New Zealand dollar fell 0.3% to $0.7177 after a gauge of consumer confidence dipped sharply in October. Sterling was about flat at $1.3784 as it continued to fluctuate near a one-month high reached last week. The pound has been buffeted recently by speculation over whether the Bank of England would proceed with an interest rate hike at its meeting next week. In cryptocurrencies, ether rose to a record $4,400, while bigger rival bitcoin also gained to trade around $61,200, but down from the record $67,016.50 reached last week. Ether “is a momentum beast at the moment, and it looks bloody strong,” said Chris Weston, head of research at brokerage Pepperstone in Melbourne. “There may have been some switching” into ether from bitcoin, he said. “Bitcoin is looking a bit vulnerable.” Reporting by Kevin Buckland Editing by Shri Navaratnam and Gerry Doyle

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