January 8, 2018 / 12:49 PM / 12 days ago

Dollar gains as euro rally falters

NEW YORK (Reuters) - The dollar rose to a more than one-week high against a basket of other major currencies on Monday, helped by a pullback in the euro as investors took profits after the common currency’s recent rally.

The dollar index .DXY, which measures the greenback against six rival currencies, was up 0.46 percent at 92.368.

The euro EUR= slipped 0.57 percent to $1.196. It had hit a nearly four-month high of $1.2089 on Thursday.

“The euro got a little bit over its skies when it traded over $1.20,” said Brad Bechtel, managing director FX at Jefferies in New York.

“It’s a little bit of profit-taking and some healthy correction going on the euro’s side, which is driving some of the dollar trades,” he said.

The euro, which has rallied in recent weeks on expectations for a shift in European Central Bank monetary policy this year, was on a weaker footing after a cooler-than-expected reading of the euro zone’s December consumer price index on Friday.

Lackluster inflation pressure in Europe has been accompanied by a strengthening economic recovery across the continent and solid economic growth in China and the United States, fueling risk appetite.

FILE PHOTO: A two Euro coin is pictured next to an English ten Pound note in an illustration taken March 16, 2016. REUTERS/Phil Noble/Illustration

The dollar found some support after generally solid U.S. economic data last week.

“The dollar selling that has been going on since Christmas got a little bit overdone, and we are sort of taking some of that back,” Bechtel said.

The dollar has too many tailwinds for a meaningful correction, Bechtel said, citing a tightening Federal Reserve, tax-driven dollar repatriation flows and strength in the U.S. economy.

Sterling climbed against the broadly weaker euro, after a Cabinet reshuffle alleviated some of the political uncertainty that has pressured the UK currency in recent months.

The Canadian dollar CAD= was slightly weaker against its U.S. counterpart. Canadian companies remain optimistic about future sales despite some moderation from highs, and signs of capacity pressures and labor shortages have picked up, the Bank of Canada said on Monday. [nL1N1P30JL]

Bitcoin sank after website CoinMarketCap, which shows real-time prices and market capitalizations for more than 1,300 cryptocurrencies, removed prices from South Korean exchanges from its calculations of digital currency rates.

Bitcoin was also undermined by news earlier in the session that South Korean financial authorities were inspecting six local banks that offer virtual currency accounts to institutions.

Bitcoin was down 6.35 percent at $15,100.04 on the Luxembourg-based Bitstamp exchange after dropping as low as $13,900.

Reporting by Saqib Iqbal Ahmed; Editing by Lisa Von Ahn and Jonathan Oatis

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