January 10, 2019 / 3:18 PM / 6 months ago

FOREX-Dollar rebounds from 3-month low as markets pare back bearish bets

    * Euro reverses gains vs dollars
    * Commodity currencies beneficiaries of improved risk
    * China, U.S. agree to extend trade talks
    * Markets look to speech by Fed's Powell
    * Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh

 (Recasts, adds comment, FX table, updates prices, changes
byline, dateline; previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Jan 10 (Reuters) - The dollar rallied from
three-month lows on Thursday, with investors reducing bearish
positions on the currency as they await resolution of U.S.-China
trade negotiations, the U.S. government shutdown, and Britain's
exit from the European Union.
    Analysts said the dollar's gains were also helped by the
euro falling, as it hit key resistance levels.
    "The anti-dollar rally we saw yesterday is just stalling
out," said Boris Schlossberg, managing director of FX strategy
at BK Asset Management in New York.
    "We're very much in a wait-and-see mode. The market is
waiting for resolution on the trade front, U.S. shutdown, and
Brexit - three factors that are keeping the market in suspended
animation right now," he added.
    In midmorning trading, the dollar index rose 0.1
percent to 95.338, after earlier dropping to a three-month
trough. It has weakened in four of the last six sessions as
traders bet U.S. interest rates will stay steady in 2019.
    Minutes from the Federal Reserve's Dec. 18-19 meeting showed
several policymakers were in favor of keeping rates steady this
    Investors are now looking to Fed Chairman Jerome Powell's
speech before the Economic Club of Washington later on Thursday.
    "The market is looking for signs that the Fed will pause or
significantly reduce its cycle of rate increases this year,"
said Dean Popplewell, vice president of market analysis, at
OANDA in Toronto.
    "Thus far, there are no signals of a Fed U-turn on interest
rates, but market pressure is mounting. U.S policymakers to date
have been less data-dependent, and more agile in order to
respond swiftly to changing conditions," he added.
    The euro, meanwhile, fell from a three-month high, having
cleared key market levels earlier after the Fed minutes signaled
a more cautious approach toward further rate hikes.
    It was last down 0.2 percent at $1.1524.
    Data out of Europe has been fairly tepid. French industrial
production fell more than expected in November while Swedish
private-sector production data was fairly flat.
    China and the United States, meanwhile, have extended trade
talks in Beijing, boosting oil prices and broader sentiment.
    That has lifted China's offshore yuan to its highest level
since August, along with recent assurances from Beijing of
further fiscal boosts to the slowing economy.
    The yuan has breached the key 6.8-per-dollar level in both
onshore and offshore trade.
    Commodity currencies such as the Australian dollar
have been the biggest beneficiaries of improving risk sentiment
this week. The Aussie dollar was last up 0.2 percent at
    Currency bid prices at 10:02AM (1502 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1524        $1.1541     -0.15%         +0.48%      +1.1570     +1.1516
 Dollar/Yen       JPY=        108.0200       108.1600    -0.13%         -2.03%      +108.2500   +107.7700
 Euro/Yen         EURJPY=     124.50         124.83      -0.26%         -1.36%      +125.0600   +124.3600
 Dollar/Swiss     CHF=        0.9798         0.9743      +0.56%         -0.16%      +0.9802     +0.9716
 Sterling/Dollar  GBP=        1.2760         1.2788      -0.22%         +0.02%      +1.2801     +1.2729
 Dollar/Canadian  CAD=        1.3240         1.3207      +0.25%         -2.91%      +1.3249     +1.3201
 Australian/Doll  AUD=        0.7183         0.7170      +0.18%         +1.90%      +0.7197     +0.7146
 Euro/Swiss       EURCHF=     1.1296         1.1246      +0.44%         +0.37%      +1.1296     +1.1238
 Euro/Sterling    EURGBP=     0.9031         0.9025      +0.07%         +0.52%      +0.9060     +0.9021
 NZ               NZD=        0.6788         0.6786      +0.03%         +1.06%      +0.6794     +0.6771
 Dollar/Norway    NOK=        8.4643         8.4685      -0.05%         -2.02%      +8.4909     +8.4452
 Euro/Norway      EURNOK=     9.7572         9.7768      -0.20%         -1.50%      +9.8011     +9.7461
 Dollar/Sweden    SEK=        8.8817         8.8664      -0.01%         -0.92%      +8.8986     +8.8561
 Euro/Sweden      EURSEK=     10.2361        10.2370     -0.01%         -0.27%      +10.2610    +10.2260
 (Reporting by Gertrude Chavez-Dreyfuss; additional reporting by
Tom Finn in London; editing by Jonathan Oatis)
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