March 21, 2019 / 7:31 PM / 4 months ago

FOREX-Dollar shrugs off Fed hit, Brexit pains help gains

    * 'No-deal' Brexit fears drag pound, euro lower
    * Norway hikes rates, in rare example of monetary tightening

 (Recasts throughout, updates market action, adds comment)
    By Saqib Iqbal Ahmed
    NEW YORK, March 21 (Reuters) - The U.S. dollar rebounded
against a basket of currencies on Thursday, recouping all its
losses from the previous session as Brexit-related worries hurt
sterling and the euro, helping to take the focus off the
surprisingly dovish Federal Reserve.
    The dollar index       , which measures the greenback
against six major currencies, was up 0.75 percent to 96.476. 
    The index fell 0.6 percent on Wednesday, closing below its
200-day moving average for the first time in more than 10
months, after the Fed jolted markets by abandoning all plans to
raise rates this year.             
    On Thursday, the pound plunged on growing fears of a
"no-deal" Brexit should British lawmakers hold firm in their
rejection of British Prime Minister Theresa May's EU divorce
deal.
    European Union leaders will offer on Thursday to delay
Brexit until May 22 at the latest - but only if May can turn
around massive parliamentary opposition and win lawmakers'
backing next week for her withdrawal plan.             
    "I think the focus shifted back to Brexit and the potential
downside that a “no deal” would create," said Minh Trang, senior
currency trader at California's Silicon Valley Bank.
    "The greenback and the higher yielding curve is still
attractive when compared to the G10," he said.
    The euro was 0.48 percent lower against the greenback.
Sterling was down nearly 1 percent and came within a whisker of
slipping below $1.30       . 
    On Thursday, the Bank of England kept interest rates steady.
            
    "The reality is the economy of no country can really handle
further increments to borrowing costs, and we may see more
scrutiny over cuts than hikes from now on," said Juan Perez,
senior currency trader at Tempus Inc in Washington.
    Despite the rebound on Thursday, Perez said he expects the
dollar to remain under pressure for the rest of 2019.
    FX strategists at Morgan Stanley also see the Fed's move as 
spelling trouble for the dollar.
    "We see the FOMC decision as a meaningfully USD-negative
signal and anticipate further declines," they wrote in a client
note.
    Norway's central bank raised its main interest rate on
Thursday, as expected, and said its next hike may come earlier
then previously planned, boosting the crown currency against the
euro           and the dollar       .             
    The Swiss franc was down slightly against the greenback
       after Swiss National Bank Chairman Thomas Jordan said
increasing global economic risks meant the central bank would
stick to its ultra-loose monetary policy for the foreseeable
future.             

    
 (Reporting by Saqib Iqbal Ahmed
Editing by Tom Brown)
  
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