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FOREX-Dollar gains, but outlook suggests weak trend
Published at 11/01/2019 at 20:22

* Euro reverses gains vs dollar

* U.S. CPI falls in December

* Chinese yuan at 6-month high

* Graphic: World FX rates in 2018

(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.

Aside 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 , but posted its fourth straight weekly decline.

The euro fell 0.3 percent to $1.1465 .

The dollar was also slightly higher versus the yen at 108.48

yen , and up versus the Canadian dollar, which fell 0.3 percent . The greenback last traded at C$1.3272.

In other trading, the Chinese yuan 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


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


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/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

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Dan Grebler and Richard Chang)

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