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FOREX-Dollar in holding pattern but traders warn of further declines

Stanley White
·3 min read

* Graphic: World FX rates in 2020 * Dollar grinds lower against many currencies * Improving risk appetite draws funds from dollar * Traders closely monitoring moves in yuan By Stanley White TOKYO, Nov 26 (Reuters) - The dollar was on the defensive on Thursday as downbeat U.S. economic data and optimism about coronavirus vaccines prompted investors to seek out riskier assets tied to global commodities and emerging markets. The British pound traded near a more than two-month high against the dollar as investors awaited details on trade talks between Britain and the European Union this week. The dollar's fall has been so rapid that it could rebound in the short term, market watchers said, but some investors still expect a decline over the longer term as they shift positions in expectation that the coronavirus outbreak will wane next year. "A China-led recovery in the global economy and commodities should benefit commodity currencies," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo. "The outlook is good, but we are reaching levels where authorities might feel some concern. Other emerging market currencies with good fundamentals should benefit." Against the euro, the dollar stood at $1.1926, close to its weakest in more than two months. Sterling bought $1.3387, which is near its strongest level since Sept. 2. The pound held steady at 89.06 pence per euro. The dollar was little changed at 104.31 yen. Investors have rushed to riskier currencies and emerging-market assets in recent weeks after positive data on COVID-19 vaccine efficacy and signs of stability in U.S. politics, which has weighed broadly on the dollar. Sentiment for the greenback took a hit after data on Wednesday showed weekly U.S. jobless claims rose more than expected and personal incomes fell. Some economists said more job losses are likely as many U.S. states reinforce restrictions on businesses to curb a spread of coronavirus infections. The dollar index against a basket of six other currencies was near the lowest in more than two months. Trading in the dollar was subdued because U.S. financial markets are closed later on Thursday for the Thanksgiving holiday. Bitcoin, the most popular cryptocurrency, fell to $17,895 after a failed attempt to breach its record high of $19,666 from December 2017. The Australian dollar traded near its highest since September, supported by improving risk appetite and strong Chinese demand for the commodities that Australia exports. The New Zealand dollar traded near its strongest level in more than two years. ======================================================== Currency bid prices at 2:44 PM (0544 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar $1.1926 $1.1914 +0.10% +6.38% +1.1930 +1.1915 Dollar/Yen 104.3150 104.4200 -0.06% -3.92% +104.4150 +104.3300 Euro/Yen 124.41 124.43 -0.02% +2.02% +124.4900 +124.3500 Dollar/Swiss 0.9070 0.9081 -0.13% -6.28% +0.9082 +0.9068 Sterling/Dollar 1.3387 1.3386 +0.01% +0.94% +1.3397 +1.3382 Dollar/Canadian 1.3000 1.3007 -0.04% +0.08% +1.3007 +1.2992 Aussie/Dollar 0.7356 0.7365 -0.11% +4.85% +0.7374 +0.7356 NZ 0.7000 0.7007 -0.10% +4.03% +0.7014 +0.6997 Dollar/Dollar All spots Tokyo spots Europe spots Volatilities Tokyo Forex market info from BOJ (Reporting by Stanley White; Editing by Christopher Cushing & Simon Cameron-Moore)