January 11, 2019 / 3:47 PM / 9 months ago

FOREX-Dollar rises vs euro, but outlook remains weak

    * Euro reverses gains vs dollar
    * U.S. CPI falls in  December
    * Chinese yuan at 6-month high 
    * Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh

 (Adds analyst comments, FX table, U.S. data, updates prices,
changes byline, dateline; previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Jan 11 (Reuters) - The dollar rose against the
euro on Friday in choppy trading, boosted by technical factors
after the single currency hit key resistance levels, even as the
greenback's outlook remained bleak amid cautious signals from
the Federal Reserve about further rate hikes.
    "It seems like we're getting some model and stop-loss buying
on the dollar after the euro hit resistance on the upside," said
John Doyle, vice president of dealing and trading at Tempus Inc.
in Washington.
    "I don't see any fundamental driver to this move. The
sharpest move was in euro/dollar and it has become this
across-the-board buying of the dollar," he added.
    That said, investors remained wary of pushing the dollar a
lot higher.
    This week's Fed minutes, which underscored the U.S. central
bank's flexibility on monetary policy, triggered dollar selling
that lifted the euro as high as $1.1581 and propelled it past a
100-day moving average for the first time in three months.
    Greg Anderson, global head of FX strategy at BMO Capital
Markets in New York, said the Fed's rate outlook is one factor
for the dollar's weakness so far in January.
    "The change (in Fed communications) this January was that
(Fed Chairman Jerome) Powell last Friday and the minutes this
week seem to indicate greater flexibility on balance sheet
policy," said Anderson.
    He added: "Well, he didn't seem flexible yesterday. He has
been all over the map on the balance sheet." 
    Powell's mixed message was a relief for financial markets in
general, but not necessarily for the dollar, Anderson said.
    The Fed chairman said on Thursday in a forum at the Economic
Club of Washington that the U.S. central bank intends to shrink
its balance sheet further, suggesting it is not done tightening
monetary policy just yet.
    Markets, however, are pricing in no further rate hikes by
the Fed this year.
    Data showing U.S. consumer prices in December fell for the
first time in nine months in December had little impact on the
market, but it backed the Fed's cautious stance about raising
rates this year.
    In mid-morning trading, the dollar index rose 0.2 percent to
95.715, with the euro falling 0.3 percent to $1.1467
    The dollar was also slightly higher versus the yen at 108.45
 yen, and up versus the Canadian dollar, which fell 0.2
percent. The greenback last traded at C$1.3265.
    In other trading, the Chinese yuan rose to its
highest level since late July against the dollar, as China and
the United States extended trade talks in Beijing. China also
gave recent assurances of further fiscal boosts to its slowing
economy, lifting the yuan as well.
    Currency bid prices at 10:19AM (1519 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1466        $1.1498     -0.28%         -0.03%      +1.1540     +1.1458
 Dollar/Yen       JPY=        108.4500       108.4200    +0.03%         -1.64%      +108.5900   +108.1500
 Euro/Yen         EURJPY=     124.37         124.68      -0.25%         -1.47%      +124.9900   +124.3000
 Dollar/Swiss     CHF=        0.9844         0.9842      +0.02%         +0.31%      +0.9856     +0.9815
 Sterling/Dollar  GBP=        1.2790         1.2747      +0.34%         +0.26%      +1.2850     +1.2711
 Dollar/Canadian  CAD=        1.3269         1.3234      +0.26%         -2.70%      +1.3274     +1.3183
 Australian/Doll  AUD=        0.7192         0.7185      +0.10%         +2.03%      +0.7235     +0.7183
 Euro/Swiss       EURCHF=     1.1291         1.1320      -0.26%         +0.34%      +1.1340     +1.1288
 Euro/Sterling    EURGBP=     0.8965         0.9015      -0.55%         -0.22%      +0.9061     +0.8962
 NZ               NZD=        0.6811         0.6778      +0.49%         +1.40%      +0.6843     +0.6781
 Dollar/Norway    NOK=        8.5215         8.4777      +0.52%         -1.36%      +8.5390     +8.4447
 Euro/Norway      EURNOK=     9.7733         9.7497      +0.24%         -1.34%      +9.7866     +9.7367
 Dollar/Sweden    SEK=        8.9322         8.9035      +0.01%         -0.36%      +8.9389     +8.8600
 Euro/Sweden      EURSEK=     10.2430        10.2420     +0.01%         -0.20%      +10.2520    +10.2090
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Tom Finn in London; Editing by Dan Grebler)
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