September 13, 2018 / 2:59 PM / 3 months ago

FOREX-Dollar falls on CPI miss, signs of U.S.-China trade reset

    * Dollar index falls to 1-1/2-month low, breaks 100-day MA
    * Euro rises to 2-week peak vs dollar amid hopes for Brexit
deal
    * Traders see Fed rate hikes despite CPI rising less than
forecast
    * ECB, BOE leave rates changed; Turkey cenbank uncorks rate
hike
    * Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh

 (Updates market action, changes dateline, previous LONDON)
    By Richard Leong
    NEW YORK, Sept 13 (Reuters) - The dollar fell to a near
1-1/2-month low against a group of currencies on Thursday after
data showed U.S. consumer prices increased less than expected in
August, paring traders' outlook that domestic inflation is
accelerating.
    Signs of reduced trade tensions between China and the United
States after Washington reached out to Beijing on Wednesday to
restart trade talks also pressured the greenback.
    "The safe-haven demand for the dollar has diminished the
past two days on positive trade developments between U.S. and
China," said Peter Ng, senior currency trader at Silicon Valley
Bank in Santa Clara, California. "Today's CPI miss has added
downward pressure on the dollar."
    The U.S. Labor Department said its Consumer Price Index, the
government's broadest inflation gauge, rose 0.2 percent in
August, less than the 0.3 percent increase projected by analysts
polled by Reuters.
    Despite the CPI miss, traders did not change their view the
Federal Reserve would raise key short-term interest rates by a
quarter point to 2.00 percent-2.25 percent at its policy meeting
in two weeks. They also anticipated the Fed would increase rates
for a fourth time this year in December.
    An index that tracks the dollar against six major rivals
 hit a near six-week low at 94.428. At 10:40 a.m. (1440
GMT), it was down 0.19 percent at 94.623.
    The greenback weakened for a fourth straight day against the
euro and sterling on hopes that Britain and the European Union
would hammer out trade terms before the Britain leaves the
economic bloc next March.
    The common currency rose to a two-week peak against the
dollar at $1.17010 before subsiding to $1.16780, up 0.44 percent
on the day, EBS data showed.
    The pound hit a six-week high versus the dollar at $1.3124.
It was last at $1.3095, up 0.36 percent.
    The European Central Bank and Bank of England as expected
left interest rates unchanged on Thursday.

    The ECB signaled it was on track to dial back its bond
purchases later this year, while the BOE highlighted concerns
from Brexit. 
    Turkey's central bank raised its benchmark rate by 625 basis
points on Thursday in a bid to shore up the lira and soothe
investor concern about President Tayyip Erdogan's influence on
monetary policy.    
    Turkey's lira rallied 2.6 percent at 66.1800 per dollar
. It had slumped to a record low of 7.2400 in
mid-August, raising investor expectations for the central bank
to tighten monetary policy and arrest the currency's slide.    
========================================================
    Currency bid prices at 10:40AM (1440 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1675        $1.1624     +0.44%         +0.00%      +1.1701     +1.1609
 Dollar/Yen       JPY=        111.8500       111.2500    +0.54%         +0.00%      +111.9100   +111.1700
 Euro/Yen         EURJPY=     130.60         129.34      +0.97%         +0.00%      +130.8000   +129.2700
 Dollar/Swiss     CHF=        0.9675         0.9704      -0.30%         +0.00%      +0.9708     +0.9659
 Sterling/Dollar  GBP=        1.3094         1.3046      +0.37%         +0.00%      +1.3121     +1.3027
 Dollar/Canadian  CAD=        1.3022         1.2995      +0.21%         +0.00%      +1.3025     +1.2975
 Australian/Doll  AUD=        0.7200         0.7168      +0.45%         +0.00%      +0.7229     +0.7166
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1296         1.1284      +0.11%         +0.00%      +1.1316     +1.1263
 Euro/Sterling    EURGBP=     0.8916         0.8911      +0.06%         +0.00%      +0.8931     +0.8894
 NZ Dollar/Dolar  NZD=        0.6564         0.6562      +0.03%         +0.00%      +0.6589     +0.6544
 Dollar/Norway    NOK=        8.2225         8.2579      -0.43%         +0.00%      +8.2642     +8.1954
 Euro/Norway      EURNOK=     9.6015         9.6012      +0.00%         +0.00%      +9.6075     +9.5642
 Dollar/Sweden    SEK=        8.9490         8.9798      +0.10%         +0.00%      +8.9947     +8.9290
 Euro/Sweden      EURSEK=     10.4502        10.4400     +0.10%         +0.00%      +10.4603    +10.4319
 
    
 (Additional reporting by Saikat Chatterjee in LONDON, Shinichi
Saoshiro in TOKYO; Editing by Meredith Mazzilli)
  
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