November 29, 2018 / 2:47 PM / 10 months ago

FOREX-Dollar recovers slightly after losses triggered by Powell's comment

    * Futures traders pricing in one rate hike in 2019
    * Fed meeting minutes on Thursday in focus
    * Pound weakens on Brexit concerns

 (New throughout, updates trading, adds comments to U.S. market
open, previous LONDON)
    By Karen Brettell
    NEW YORK, Nov 29 (Reuters) - The greenback gained slightly
on Thursday as investors continued to digest comments from
Federal Reserve Chairman Jerome Powell on Wednesday that took a
more dovish turn than expected and sent the dollar tumbling.
    Powell said that the central bank's policy rate is now "just
below" estimates of a level that neither brakes nor boosts a
healthy U.S. economy, comments that many investors read as
signaling the Fed's three-year tightening cycle is drawing to a
    Interest rate futures traders are now pricing for only one
rate hike in 2019, according to the CME Group’s FedWatch Tool,
below Fed projections of three increases during the year.
    “You saw a pretty massive repricing yesterday of Fed
expectations and the dollar and markets may have overreacted a
little bit to it,” said Erik Nelson, a currency strategist at
Wells Fargo in New York. “The room for downward repricing in Fed
expectations from here may be kind of limited.”
    The dollar index was last up 0.04 percent on the day
at 96.823.
    Minutes from the Fed's Nov. 7-8 meeting, to be released at 2
p.m. EST (1900 GMT), will next be evaluated for further
indications of how many more times the U.S. central bank is
likely to hike interest rates.
    The greenback weakened earlier on Thursday after data showed
that inflation slowed in October, despite a jump in consumer
    The personal consumption expenditures (PCE) price index
excluding the volatile food and energy components edged up 0.1
percent after increasing 0.2 percent in September.
    The tepid inflation “takes some pressure off the Fed at the
margin,” said Nelson.
    Consumer spending, which accounts for more than two-thirds
of U.S. economic activity, jumped 0.6 percent last month as
households spent more on prescription medication and utilities.

    Investors are also focused on the G20 summit in Buenos Aires
on Friday and Saturday, where Trump and his Chinese counterpart,
Xi Jinping, are scheduled to discuss contentious trade matters.
    Trump said on Thursday said there was "a long way to go" on
tariffs with China and urged companies to build products in the
United States to avoid them.
    Elsewhere, the pound lost about 0.4 percent against the
dollar on concern about the UK parliament's vote on
Brexit and after the Bank of England warned of risks to the
currency if Britain leaves the European Union in a disorderedly
    Currency bid prices at 9:23AM (1423 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1376        $1.1366     +0.09%         -5.17%      +1.1401     +1.1349
 Dollar/Yen       JPY=        113.2800       113.6800    -0.35%         +0.54%      +113.6800   +113.2000
 Euro/Yen         EURJPY=     128.90         129.20      -0.23%         -4.65%      +129.2300   +128.6800
 Dollar/Swiss     CHF=        0.9957         0.9936      +0.21%         +2.19%      +0.9965     +0.9918
 Sterling/Dollar  GBP=        1.2774         1.2824      -0.39%         -5.46%      +1.2850     +1.2756
 Dollar/Canadian  CAD=        1.3267         1.3275      -0.06%         +5.47%      +1.3312     +1.3253
 Australian/Doll  AUD=        0.7328         0.7304      +0.33%         -6.06%      +0.7344     +0.7295
 Euro/Swiss       EURCHF=     1.1328         1.1294      +0.30%         -3.09%      +1.1333     +1.1290
 Euro/Sterling    EURGBP=     0.8902         0.8861      +0.46%         +0.21%      +0.8921     +0.8859
 NZ               NZD=        0.6864         0.6869      -0.07%         -3.13%      +0.6883     +0.6839
 Dollar/Norway    NOK=        8.5369         8.5574      -0.24%         +4.02%      +8.5832     +8.5329
 Euro/Norway      EURNOK=     9.7134         9.7268      -0.14%         -1.36%      +9.7497     +9.7155
 Dollar/Sweden    SEK=        9.0639         9.0358      +0.39%         +10.51%     +9.0896     +9.0117
 Euro/Sweden      EURSEK=     10.3120        10.2717     +0.39%         +4.81%      +10.3280    +10.2649

 (Editing by Susan Thomas)
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