September 21, 2018 / 6:53 PM / 2 months ago

FOREX-Pound plunges after no-deal Brexit fears rise, boosting dollar

    * Pound set for biggest daily loss since 2017
    * Dollar bounces, but set for biggest weekly drop since Feb
    * GRAPHIC-World FX rates in 2018: tmsnrt.rs/2egbfVh

 (Adds analyst comments, updates prices, adds details on U.S.
Fed)
    By Kate Duguid
    NEW YORK, Sept 21 (Reuters) - Sterling plunged on Friday,
driving the U.S. dollar up, after fears rose that Britain would
leave the European Union without a trade deal. 
    British Prime Minister Theresa May said on Friday the
European Union must supply an alternative Brexit proposal,
saying talks had reached an impasse after the bloc's leaders had
rejected her plans without fully explaining why. The pound
 was down 1.44 percent on Friday, set for its biggest
daily loss since June 2017.
    "Sterling bears are out in full force. They've pushed the
pound quite aggressively down this morning," said Dean
Popplewell, chief currency strategist at Oanda in Toronto, "and
it looks like they want to push things further."
    The pound's move strengthened the dollar, which rebounded
from early lows, but it was still on track for its biggest
weekly drop since February as stronger equity markets and rising
bond yields fuelled a rush to buy riskier assets. The dollar
index rose 0.38 percent Friday to 94.255.
    "On the back of (the pound's fall), it's interesting the
dollar got a bit of a bid as well. The trade woes in the last 48
hours took a bit of a back seat and it did allow some of the
risk takers to set their sights on some of the other G7
currencies," said Popplewell.
    With trade war concerns receding and emerging market central
banks led by Turkey taking measures to stabilize their
currencies, investors pushed the euro just past the $1.18
line for the first time in more than three months during the
European session. The dollar's bounce, however, pulled the
single currency back into the red, last at $1.174.
    The safe-haven bid into the dollar has been bolstered by
strong U.S. economic data, boosting the value of the currency as
trade tension between Washington and Beijing escalates. As the
tariff talk has faded out of focus, traders have made classic
risk-on moves.
    Other safe-haven assets have also suffered, including the
Japanese yen against which the dollar has strengthened
this week. On Friday, 112.62 yen bought one U.S. dollar, the
highest price since July 2018.
    The market will be focused on the Federal Reserve's
policymaking committee meeting next week, at which a hike in
interest rates is expected by 93.8 percent of traders, according
to CME Group's FedWatch tool. 
    With the likelihood of a Fed hike almost fully priced in by
the market, analysts at TD Securities suggest that might yield
an "asymmetric response in the FX markets where the dollar
weakens more on a dovish take than rallies on a hawkish one." 
    
    ========================================================
    Currency bid prices at 2:38PM (1838 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1742        $1.1775     -0.28%         -2.12%      +1.1803     +1.1733
 Dollar/Yen       JPY=        112.6100       112.4800    +0.12%         -0.05%      +112.8700   +112.4400
 Euro/Yen         EURJPY=     132.24         132.46      -0.17%         -2.17%      +133.1200   +132.1800
 Dollar/Swiss     CHF=        0.9590         0.9587      +0.03%         -1.57%      +0.9598     +0.9543
 Sterling/Dollar  GBP=        1.3073         1.3265      -1.45%         -3.25%      +1.3277     +1.3057
 Dollar/Canadian  CAD=        1.2922         1.2901      +0.16%         +2.74%      +1.2943     +1.2886
 Australian/Doll  AUD=        0.7278         0.7289      -0.15%         -6.70%      +0.7304     +0.7264
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1261         1.1292      -0.27%         -3.66%      +1.1308     +1.1224
 Euro/Sterling    EURGBP=     0.8981         0.8873      +1.22%         +1.10%      +0.8994     +0.8871
 NZ Dollar/Dolar  NZD=        0.6673         0.6683      -0.15%         -5.83%      +0.6698     +0.6668
 Dollar/Norway    NOK=        8.1520         8.1427      +0.11%         -0.67%      +8.1603     +8.1218
 Euro/Norway      EURNOK=     9.5739         9.5934      -0.20%         -2.79%      +9.6033     +9.5631
 Dollar/Sweden    SEK=        8.7920         8.7719      -0.07%         +7.20%      +8.8008     +8.7566
 Euro/Sweden      EURSEK=     10.3260        10.3330     -0.07%         +4.95%      +10.3596    +10.3120
 


    
 (Reporting by Kate Duguid in New York and Saikat Chatterjee in
London
Additional reporting by Shinichi Saoshiro in Tokyo
Editing by Andrea Ricci and Matthew Lewis)
  
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