October 31, 2019 / 1:59 PM / 3 months ago

FOREX-Dollar drops after Fed rate cut, European data beat forecasts

    * Market participants see further U.S. rate cuts possible
    * Euro zone economic growth steady over past quarter
    * U.S. consumer spending rose in September

 (New throughout, updates prices, market activity and comments
to U.S. market open, new byline, changes dateline, previous
    By Karen Brettell
    NEW YORK, Oct 31 (Reuters) - The dollar fell to a 10-day low
against a basket of major currencies on Thursday as investors
evaluated whether the Federal Reserve would continue to cut
rates, and after European data beat expectations.
    The Fed on Wednesday lowered its policy rate by a quarter of
a percentage point to a target range of 1.50% to 1.75%.
    It also dropped a previous reference in its policy statement
that it would "act as appropriate" to sustain the economic
expansion - language that was considered a sign of future rate
    Market participants remain concerned about a slowdown in the
U.S. economy as the trade war between the United States and
China continues, however, which could force the Fed’s hand.
    "The new, slightly shorter, statement tries to keep their
options open and puts them back into a data-dependent mode, but
circumstances could mean that they have less optionality than
they think," said Tim Foster, portfolio manager at Fidelity
International in London.
    The dollar index dropped as low as 97.22, the lowest
since Oct. 21, before retracing to 97.38, down 0.27% on the day.
It rose as high as 98.00 on Wednesday following the Fed
decision, its highest since Oct. 17.
    Speculators have been cutting their long dollar bets as the
U.S. currency holds near historically high levels. Any
improvement in global data is considered likely to weigh on the
dollar as investors bet on improving growth in Europe and other
    There is a view "that the dollar is expensive and as the
global economy might be able to rebound next year, then the bias
is to sell the dollar," said Vassili Serebriakov, an FX
strategist at UBS in New York.
    Data released on Thursday showed that euro zone economic
growth was unchanged in the third quarter, beating market
expectations that it would slow.
    In the United States, consumer spending rose in September
while wages were unchanged, which could cast doubt on whether 
consumers would continue to drive the economy.
Payrolls data for October released on Friday are the next major
U.S. economic focus.
    The Japanese yen gained to a two-week high as optimism that
the United States and China would reach a trade deal faded.
    Chinese officials have doubts about whether they can reach a
comprehensive long-term trade agreement with Washington and U.S.
President Donald Trump, Bloomberg reported on Thursday, citing
unnamed sources.
    Currency bid prices at 9:34AM (1334 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1144        $1.1148     -0.04%         -2.83%      +1.1174     +1.1145
 Dollar/Yen       JPY=        108.2800       108.8300    -0.51%         -1.80%      +108.8900   +108.1100
 Euro/Yen         EURJPY=     120.72         121.36      -0.53%         -4.36%      +121.4600   +120.5600
 Dollar/Swiss     CHF=        0.9875         0.9892      -0.17%         +0.62%      +0.9895     +0.9862
 Sterling/Dollar  GBP=        1.2952         1.2901      +0.40%         +1.53%      +1.2975     +1.2895
 Dollar/Canadian  CAD=        1.3157         1.3156      +0.01%         -3.52%      +1.3178     +1.3148
 Australian/Doll  AUD=        0.6908         0.6902      +0.09%         -2.00%      +0.6929     +0.6889
 Euro/Swiss       EURCHF=     1.1008         1.1030      -0.20%         -2.19%      +1.1036     +1.1006
 Euro/Sterling    EURGBP=     0.8603         0.8641      -0.44%         -4.24%      +0.8647     +0.8602
 NZ               NZD=        0.6425         0.6387      +0.59%         -4.35%      +0.6432     +0.6386
 Dollar/Norway    NOK=        9.1891         9.1813      +0.08%         +6.37%      +9.2212     +9.1586
 Euro/Norway      EURNOK=     10.2425        10.2350     +0.07%         +3.40%      +10.2815    +10.2270
 Dollar/Sweden    SEK=        9.6402         9.6517      -0.14%         +7.55%      +9.6670     +9.6203
 Euro/Sweden      EURSEK=     10.7449        10.7605     -0.14%         +4.69%      +10.7841    +10.7430

 (Additional reporting by Olga Cotaga in London, editing by
Larry King)
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