September 27, 2018 / 3:16 PM / 2 months ago

FOREX-Dollar rises on Fed rate outlook; euro falls on Italian budget woes

    * Euro reverses gains after Italian newspaper reports
    * Dollar rises to more than one-week high
    * 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, Sept 27 (Reuters) - The dollar rose to a more than
one-week high against a basket of other major currencies on
Thursday, boosted by the Federal Reserve's outlook for more rate
hikes beyond this year as well as a weakening of the euro on
worries about the Italian budget.
    The greenback reached a two-week peak against the Swiss
franc and the Canadian dollar, which fell overnight after U.S.
President Donald Trump criticized Canada over the slow pace of
talks on the North American Free Trade Agreement.
    On Wednesday, the Fed raised rates for the third time in
2018, as expected. The central bank still foresees another rate
hike in December, three more next year, and one increase in
2020.
    That helped propel the dollar on Wednesday and carried over
to Thursday, even as the Fed dropped "accommodative" from the
its statement, which some analysts said was a dovish signal
since it meant the Fed was moving to a neutral stance.
    Fed Chairman Jerome Powell later said its monetary policy
was still accommodative.
    "The Fed is moving faster than most central banks and that's
dollar-supportive," said Erik Nelson, currency strategist, at
Wells Fargo Securities in New York.
    "The Fed removed 'accommodative' in its statement and people
are saying that we are moving closer to  neutral. That will be
eventually become a factor supporting foreign currencies against
the dollar. But I am not sure we're there yet."
    In late morning trading, the dollar index rose 0.5 percent
to 94.66.
    The greenback's gains came at the expense of the euro, which
declined on media reports that an Italian budget meeting was
likely to be delayed. That spooked traders concerned that
Italy's ruling parties will push for a bigger deficit target.
    The euro dropped 0.4 percent to $1.1690, after
falling to $1.1671, its weakest since Sept. 20.
    Political wrangling over the budget in heavily indebted
Italy, the euro zone's third-biggest economy, has overshadowed a
recent revival in the euro's fortunes against the dollar.  
    Market analysts attributed the euro's drop to a report by
the Corriere della Serra that a budget meeting scheduled for
1600 GMT was likely to be delayed. 
    Italian daily La Stampa said Economy Minister Giovanni Tria
"was ready to leave," before a spokeswoman for the ministry
denied that the minister planned to quit.
    Prime Minister Giuseppe Conte's office denied the cabinet
meeting would be delayed but with Italy's new government
struggling to contain the battle over fiscal policy, investors
dumped the euro.
    
    ========================================================
    Currency bid prices at 10:42AM (1442 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1683        $1.1738     -0.47%         -2.61%      +1.1757     +1.1671
 Dollar/Yen       JPY=        113.1500       112.7200    +0.38%         +0.43%      +113.1800   +112.5700
 Euro/Yen         EURJPY=     132.22         132.34      -0.09%         -2.19%      +132.6700   +131.5800
 Dollar/Swiss     CHF=        0.9749         0.9657      +0.95%         +0.05%      +0.9750     +0.9648
 Sterling/Dollar  GBP=        1.3121         1.3168      -0.36%         -2.89%      +1.3186     +1.3109
 Dollar/Canadian  CAD=        1.3055         1.3017      +0.29%         +3.78%      +1.3081     +1.3015
 Australian/Doll  AUD=        0.7223         0.7256      -0.45%         -7.41%      +0.7268     +0.7213
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1393         1.1339      +0.48%         -2.53%      +1.1394     +1.1313
 Euro/Sterling    EURGBP=     0.8903         0.8912      -0.10%         +0.23%      +0.8937     +0.8886
 NZ               NZD=        0.6635         0.6654      -0.29%         -6.36%      +0.6676     +0.6626
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        8.1243         8.1101      +0.18%         -1.02%      +8.1373     +8.0935
 Euro/Norway      EURNOK=     9.4933         9.5202      -0.28%         -3.61%      +9.5281     +9.4817
 Dollar/Sweden    SEK=        8.8185         8.8093      -0.40%         +7.52%      +8.8530     +8.7988
 Euro/Sweden      EURSEK=     10.3020        10.3434     -0.40%         +4.73%      +10.3535    +10.2940
 
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Tommy Wilkes in London)
  
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