May 14, 2018 / 1:44 PM / 12 days ago

FOREX-Dollar slips as rally loses momentum

 (Updates prices, market activity and comments to U.S. market
open, new byline, changes dateline, previous LONDON)
    By Karen Brettell
    NEW YORK, May 14 (Reuters) - The dollar fell to one-week
lows on Monday as investors questioned whether a rally that last
week sent the greenback to more than four-month highs had run
out of steam.
    The dollar has gained as a rise in U.S. Treasury yields
highlighted the wide interest rate gap between the United States
and other countries.
    But the surge was stymied by soft April U.S. consumer price
data published last week that introduced doubts about
expectations that the Federal Reserve would raise rates as many
as four times in 2018.
    “The momentum behind the dollar move is starting to stall a
little bit,” said Mark McCormick, North American head of FX
strategy at TD Securities in Toronto. “Where we are right now is
markets are trying to figure out whether or not they want to
take the dollar higher.”
    The index fell 0.29 percent on Monday to 92.270. It
has fallen from 93.416 last Wednesday, the highest since Dec.
22.
    Growing worries about the U.S. budget deficit, which is
projected to balloon to more than $1 trillion in 2019 due to a
government spending splurge and large corporate tax cuts, have
also undermined the dollar, along with concerns about the
country's current account deficit.
    "Barring a significant, and unlikely, pickup in
productivity, a persistent USD rally is unlikely as the twin
deficits crowd out private investment by raising borrowing
costs," Hans Redeker, global head of currency strategy at Morgan
Stanley in London, wrote in a note.
    The euro strengthened even as investors kept a wary eye on
political events in Italy.
    Italy's anti-establishment 5-Star Movement and the far-right
League, both hostile to European Union budget rules, spent the
weekend in talks to forge a common policy program. The parties
were adversaries as recently as March but now appear likely to
form Italy's next government.
    The euro gained 0.41 percent to $1.1991, having
fallen last week to $1.1823, its weakest since Dec. 22.
    Investors are focused this week on speeches by Fed and
European Central Bank officials, as well as German data on
Tuesday that is expected to show some slowdown in economic
growth.
    
    ========================================================
    Currency bid prices at 9:33AM (1333 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1991        $1.1942     +0.41%         -0.04%      +1.1996     +1.1940
 Dollar/Yen       JPY=        109.5100       109.3800    +0.12%         -2.80%      +109.5900   +109.2200
 Euro/Yen         EURJPY=     131.34         130.59      +0.57%         -2.84%      +131.3700   +130.5100
 Dollar/Swiss     CHF=        0.9960         1.0004      -0.44%         +2.23%      +1.0008     +0.9958
 Sterling/Dollar  GBP=        1.3593         1.3541      +0.38%         +0.60%      +1.3602     +1.3540
 Dollar/Canadian  CAD=        1.2756         1.2791      -0.27%         +1.42%      +1.2794     +1.2752
 Australian/Doll  AUD=        0.7557         0.7542      +0.20%         -3.13%      +0.7565     +0.7542
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1947         1.1944      +0.03%         +2.21%      +1.1980     +1.1944
 Euro/Sterling    EURGBP=     0.8820         0.8817      +0.03%         -0.71%      +0.8827     +0.8811
 NZ Dollar/Dolar  NZD=        0.6946         0.6966      -0.29%         -1.98%      +0.6974     +0.6938
 Dollar/Norway    NOK=        7.9836         8.0004      -0.21%         -2.72%      +8.0012     +7.9651
 Euro/Norway      EURNOK=     9.5761         9.5525      +0.25%         -2.77%      +9.5830     +9.5340
 Dollar/Sweden    SEK=        8.5907         8.5937      +0.34%         +4.75%      +8.6034     +8.5709
 Euro/Sweden      EURSEK=     10.3023        10.2670     +0.34%         +4.71%      +10.3088    +10.2594
 
    

 (Additional reporting by Tom Finn in London; editing by
Jonathan Oatis)
  
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