* Dollar rally pauses, Aussie and Kiwi gain* Bitcoin touches five-month high* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E(Adds analyst
* Dollar rally pauses, Aussie and Kiwi gain
* Bitcoin touches five-month high
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
(Adds analyst comments, updates prices)
By John McCrank
NEW YORK, Oct 14 (Reuters) – The dollar was slightly lower
on Thursday in choppy trading, having erased most of its early
session losses, as investors bet the Federal Reserve would begin
tapering its asset purchases next month and attention turned to
the timing of interest rate hikes.
The greenback had rallied since early September on
expectations the U.S. central bank would tighten monetary policy
more quickly than previously expected amid an improving economy
and surging inflation.
But the dollar reversed course on Wednesday, even after the
minutes of the Fed’s Sept. 21-22 policy meeting confirmed the
tapering of stimulus is likely to start this year and data
showed that pricing pressures were still hitting U.S. consumers.
“I think what we’ve seen over the last day or two is a
little bit of profit-taking,” said Shaun Osborne, chief FX
strategist at Scotia Capital.
“I don’t think this is, at the moment, anything close to a
significant reversal in the dollar trend, and in fact, I think
what we’ve seen today might be a sign that the corrective
rebound that we’ve seen over the past day or two has perhaps run
its course,” he said.
The market is expecting that the Fed will begin tapering its
asset purchases as early as next month, and that the wind-down
of the massive bond-buying program will happen fairly quickly,
Osborne added.
“That seems to be advancing to some extent towards when and
how quickly the Fed is going to raise interest rates, so that’s
another potential positive for the dollar,” he said.
At 3:25 p.m. EDT, the dollar index was down 0.036% at
93.982, having climbed back from a 10-day low of 93.754 earlier
in the session. On Tuesday, the greenback hit a one-year high of
94.563.
The euro was flat against the dollar, at $1.15955,
falling from a nine-day high reached overnight, while the
British pound was up 0.15% against the dollar, at $1.36815.
A return in risk appetite may also have dented demand for
the safe-haven greenback, with U.S. equity markets notching
solid gains on upbeat earnings, said Vassili Serebriakov, FX and
macro strategist at UBS.
Data on Thursday showed the number of Americans filing new
claims for unemployment benefits fell sharply last week to the
lowest level since mid-March 2020.
In another report, the Labor Department said its producer
price index for final demand rose, but the increase was less
than economists polled by Reuters expected, both on a monthly
and a year-on-year basis.
The Australian dollar, which is seen as a liquid proxy for
risk appetite, was up 0.47% versus the dollar at $0.7414
, its highest level since Sept. 7.
The New Zealand dollar also rose, up 0.93% at $0.7030, its
highest mark in 2-1/2 weeks.
Elsewhere, the cryptocurrency bitcoin was up
0.13% at $57,451. It hit a five-month high of $58,550 earlier in
the session.
(Reporting by John McCrank in New York; Editing by Emelia
Sithole-Matarise, Kim Coghill and Paul Simao)
www.lse.co.uk