* Dollar on track for biggest weekly drop in three months
* Graphic: World FX rates in 2019
(Recasts, updates prices)
By Kate Duguid
NEW YORK, March 15 (Reuters) - The dollar fell broadly on Friday
and was set for its biggest weekly drop in more than three months,
dragged lower by weak U.S. economic data, while sterling was slightly
below its highest level since June 2018, hit Wednesday after Britain's
parliament rejected a "no-deal" exit from the European Union.
U.S. manufacturing output fell for a second straight month in
February and factory activity in New York state was weaker than
expected this month, offering further evidence of a sharp slowdown in
economic growth early in the first quarter.
Friday's reports extended the streak of weak economic data and
underscored the Federal Reserve's "patient" stance toward
further interest rate increases this year. Fed officials are scheduled
to meet next Tuesday and Wednesday to assess the economy and
deliberate on the future course of monetary policy. The U.S. central
bank raised rates four times last year.
"Data today on factory growth and the Empire State index also
underwhelmed. Consequently, the Fed next week is likely to keep in
wait-and-see mode on interest rates, a cautious stance that’s checked
the dollar’s rise," said Joe Manimbo, senior market analyst at
Western Union Business Solutions.
The dollar index , was 0.21 percent lower, last at 96.580, set
for its biggest weekly loss since the first week of December. The move
in the dollar sent the euro higher, last up 0.14 percent to
While no change in rates is expected next week after the Fed
paused a multi-year rate-hiking cycle in January, officials might
strike a more cautious view on the outlook for the global economy
after a volatile week in currency markets.
The pound paused for breath but stayed on course for its biggest
weekly gain in seven weeks on growing expectations that Britain will
not crash out of the EU without a deal on March 29.
Sterling last traded at $1.3286, below Wednesday's nine-month
high of $1.3380 but up 2 percent so far this week, the biggest such
gain since late January after the UK parliament voted to seek a delay
in Britain's exit from the EU, following a decision to avert a no-deal
"The market has some reassurance that the chances of a
no-deal Brexit are very low, which is the reason why the currency
market has taken this news as a positive. These votes have removed the
worst-case scenario," said Ugo Lancioni, head of global currency
at Neuberger Berman in London.
The yen remained firm after the Bank of Japan kept monetary
policy steady but tempered its optimism that robust exports and
factory output will underpin growth, giving a boost to its perceived
Short Bets against AUD grows World FX rates in 2019:
(Reporting by Kate Duguid and Saikat Chatterjee; Editing by Dan
Grebler and James Dalgleish)
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