FOREX-Dollar gets a bruising as investors push back rate hike bets

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FOREX-Dollar gets a bruising as investors push back rate hike betsReuters – UK Focus – Fri, Apr 17, 2015 12:14 BST


RELATED QUOTESSymbolPriceChange6436.TWO41.300.00ACA.SW14.64-0.26CPICQ0.00910.0000

* Dollar index on track for 2nd worst week since 2011

* U.S. CPI (Other OTC: CPICQ – news) focus after series of lacklustre economic data

* FX market appears sanguine on « Grexit » risk

* Sterling enjoys best week in 5-1/2 years

By Jemima Kelly

LONDON, April 17 (Reuters) – The dollar skidded to a 10-day
low against a basket of major currencies on Friday, after a run
of weak U.S. economic data that has cast doubt on prospects for
a Federal Reserve interest rate rise in the coming months.

The greenback had rallied by as much as 30 percent since May
last year, hitting 12-year highs in March and getting close to
them again last week as investors bet that the Fed would start
hiking rates as early as June. But as the data has disappointed,
those bets have been pushed back.

The latest numbers showed U.S. housing starts rose less than
expected in March and factory activity in the mid-Atlantic
region grew modestly this month. That suggests the economy may
struggle to rebound from a weak first quarter.

Traders will be watching U.S. consumer inflation data due at
1230 GMT for further clues on the state of the economy.

The dollar index, which measures the dollar’s performance
against a basket of major currencies, fell to 97.001, its
weakest since April 7, and leaving it on track for a more than 2
percent drop this week — its second worst weekly performance
since 2011.

« Not only is the June rate hike off the table, but some
people are taking a rate hike off for all of this year, » said
Adam Myers, European head of FX strategy at Credit Agricole (Swiss: ACA.SW – news) in

Benefiting from the dollar’s weakness, the euro has had its
best week in a month against the greenback, rising over 2
percent despite growing concerns that Greece’s debt crisis will
lead the country to default and to eventually leave the euro
zone. It was 0.6 percent higher on Friday at $1.0821.

« Greece is not an issue for the FX market, » said Peter
Kinsella, senior FX strategist at Commmerzbank in London.

« Every corporate in Europe at this stage has contingency
plans in the event of a Grexit. Even (Taiwan OTC: 6436.TWO – news) (if) it were to take place
it wouldn’t really be a surprise for the market, so further
downside in the euro on that basis is not so obvious. »

Sterling has also benefited from the dollar’s weakness,
enjoying its best week in 5-1/2 years despite a looming highly
uncertain parliamentary election in three weeks’ time.

The pound hit a one-month high on Friday at $1.5053
before retreating a little to $1.5022, still up 0.6 percent and
on track for weekly gains of almost 3 percent.

(Editing by Alison Williams)

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