December 21, 2018 / 4:01 PM / 6 months ago

FOREX-Dollar rebounds from post-Fed losses as U.S. shutdown looms

    * Markets brace for possible U.S. govt shutdown
    * U.S. data mixed overall, but will not stop Fed from
    * Graphic: World FX rates in 2018

 (Recasts, adds comment, FX table, U.S. data, updates prices,
changes byline, dateline; previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Dec 21 (Reuters) - The dollar gained on Friday,
reversing most of its losses after the Federal Reserve flagged
fewer interest rate hikes earlier this week, as investors sought
the currency's safety amid persistent equity market volatility
and a possible U.S. government shutdown. 
    The safe-haven yen also gained versus the dollar, benefiting
from the overall market anxiety. The Japanese currency was on
track to post its largest weekly percentage rise against the
greenback in 10 months.
    U.S. President Donald Trump on Friday threatened a "very
long" government shutdown just hours ahead of a midnight
deadline, calling on the Senate to pass spending legislation
that includes his $5 billion demand for border wall funding. 

    While the news has not pressured U.S. stocks overall,
so-called defensive shares have gained, suggesting some
nervousness about the general market environment.
    "It’s not clear at this stage whether President Trump would
agree to a continuing resolution to temporarily fund the
government, or would instead seek a government shutdown, which
would go into effect at midnight tonight," said Nick
Bennenbroek, currency strategist at Wells Fargo Securities in
New York.
    He added that if the shutdown goes into effect, he expects
the dollar to continue its bounce next week.
    U.S. economic reports on Friday, meanwhile, were mixed and
had minimal impact on the dollar.
    Data showed orders for nondefense capital goods excluding
aircraft, a closely watched proxy for business spending plans,
dropped 0.6 percent last month after an upwardly revised 0.5
percent increase in October. 
    The U.S. economy also slowed slightly more than previously
estimated in the third quarter, and momentum appears to have
moderated further in the fourth, according to the Commerce
    Data also indicated that U.S. consumer spending increased
solidly in November, as households bought motor vehicles and
spent more on utilities, but wage growth remained moderate,
suggesting the current pace of consumption was unlikely to be
    The so-called core PCE price index, the Fed's  preferred
inflation measure, rose to 1.9 percent year-on-year, from an
eight-month low of 1.8 percent in October.
    "With economic growth strong, helped by a pickup in
consumption growth, and core inflation close to the 2 percent
target, there appears to be little in the incoming data that
would prompt the Fed to halt raising rates imminently," said
Michael Pearce, senior U.S. economist at Capital Economics in
New York.
    In late morning trading, the dollar index rose 0.5 percent
to 96.759. 
    The euro, the largest component of the dollar index, fell
0.4 percent versus the dollar to $1.1392.
    As liquidity thinned ahead of the Christmas and New Year
holidays, large currency options had an impact on the cash
market. For instance, large options around the $1.15 level also
pulled the euro lower.
    The dollar, meanwhile, slipped 0.1 percent versus the yen to
111.21 yen.
    Currency bid prices at 10:45AM (1545 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1394        $1.1444     -0.44%         -5.02%      +1.1475     +1.1384
 Dollar/Yen       JPY=        111.2000       111.2800    -0.07%         -1.30%      +111.4500   +110.9400
 Euro/Yen         EURJPY=     126.70         127.37      -0.53%         -6.27%      +127.6900   +126.5500
 Dollar/Swiss     CHF=        0.9917         0.9878      +0.39%         +1.79%      +0.9930     +0.9862
 Sterling/Dollar  GBP=        1.2651         1.2655      -0.03%         -6.36%      +1.2697     +1.2632
 Dollar/Canadian  CAD=        1.3533         1.3507      +0.19%         +7.60%      +1.3563     +1.3492
 Australian/Doll  AUD=        0.7098         0.7109      -0.15%         -9.01%      +0.7123     +0.7073
 Euro/Swiss       EURCHF=     1.1300         1.1305      -0.04%         -3.33%      +1.1324     +1.1292
 Euro/Sterling    EURGBP=     0.9004         0.9043      -0.43%         +1.37%      +0.9051     +0.8999
 NZ               NZD=        0.6738         0.6774      -0.53%         -4.91%      +0.6790     +0.6725
 Dollar/Norway    NOK=        8.7374         8.6803      +0.66%         +6.47%      +8.7595     +8.6475
 Euro/Norway      EURNOK=     9.9579         9.9450      +0.13%         +1.11%      +9.9935     +9.9124
 Dollar/Sweden    SEK=        9.0069         8.9746      -0.10%         +9.82%      +9.0403     +8.9274
 Euro/Sweden      EURSEK=     10.2643        10.2743     -0.10%         +4.33%      +10.3105    +10.2370
 (Reporting by Gertrude Chavez-Dreyfuss; additional reporting by
Saikat Chatterjee in London; editing by Jonathan Oatis)
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