October 17, 2018 / 1:51 PM / a month ago

FOREX-Dollar gains on stock weakness, before Fed minutes

    * Dollar gains as stocks open weaker
    * Sterling falls after inflation disappoints
    * Fed meeting minutes from September in focus

 (New throughout, updates prices, market activity and comments
to U.S. market open, new byline, changes dateline, previous
LONDON)
    By Karen Brettell
    NEW YORK, Oct 17 (Reuters) - The U.S. dollar gained on
Wednesday as stocks dipped, boosting demand for safe haven
currencies, and before the Federal Reserve is due to release the
minutes from its September meeting.
    Stocks weakened a day after Wall Street's strongest rally in
seven months as investors were disappointed with IBM's results
and cautious ahead of the Fed minutes.
    “The market once again is in a nervous mode, which is
supporting safe haven currencies like the dollar,” said Joe
Manimbo, senior market analyst at Western Union Business
Solutions in Washington.
    The dollar index gained 0.32 percent to 95.355, but
held in the relatively tight range it has traded in for the past
week.
    "The dollar is trapped in a sideways range and we need more
confirmation on the data front to push it higher from these
levels," said Bernd Berg, a global macro and foreign exchange
strategist at Woodman Asset Management in Switzerland.
    Investors are focused on the Fed's meeting minutes for
further clues over how many further rate increases are likely.
    “If they signal full speed ahead for a December rate hike
and further increases next year, that could certainly keep the
dollar biased higher,” said Manimbo.
    Interest rate futures are pricing in a 77 percent likelihood
that the U.S. central bank rates in December for the fourth time
this year, according to the CME Group's FedWatch Tool. Two more
increases are likely next year.
    Some market analysts warned against buying into the dollar's
strength, however, saying that financial conditions appeared to
be tightening globally.
    Cross-currency basis swaps in euros, yen and sterling -
money market gauges of offshore dollar liquidity - have widened
in recent weeks, suggesting that the Fed's rate hikes have cut
into the availability of overseas dollars.
    "Risk caution is warranted ... the replacement of Fed
liquidity has come at the expense of tightening liquidity
conditions outside the U.S.," Morgan Stanley strategists said.
    The British pound was the biggest loser against the dollar,
after consumer price data for September came in at an annual
rate of 2.4 percent versus forecasts of 2.6 percent.

    
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    Currency bid prices at 9:40AM (1340 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1535        $1.1573     -0.33%         -3.84%      +1.1583     +1.1521
 Dollar/Yen       JPY=        112.2000       112.2500    -0.04%         -0.42%      +112.4100   +112.1600
 Euro/Yen         EURJPY=     129.44         129.91      -0.36%         -4.25%      +130.1500   +129.3400
 Dollar/Swiss     CHF=        0.9919         0.9906      +0.13%         +1.81%      +0.9939     +0.9901
 Sterling/Dollar  GBP=        1.3113         1.3184      -0.54%         -2.95%      +1.3192     +1.3101
 Dollar/Canadian  CAD=        1.2981         1.2932      +0.38%         +3.21%      +1.2993     +1.2932
 Australian/Doll  AUD=        0.7123         0.7140      -0.24%         -8.69%      +0.7159     +0.7118
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1443         1.1466      -0.20%         -2.10%      +1.1482     +1.1438
 Euro/Sterling    EURGBP=     0.8796         0.8780      +0.18%         -0.98%      +0.8807     +0.8768
 NZ               NZD=        0.6568         0.6582      -0.21%         -7.31%      +0.6601     +0.6559
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        8.1809         8.1450      +0.44%         -0.32%      +8.1876     +8.1413
 Euro/Norway      EURNOK=     9.4394         9.4292      +0.11%         -4.15%      +9.4410     +9.4177
 Dollar/Sweden    SEK=        8.9424         8.9035      +0.08%         +9.03%      +8.9521     +8.8904
 Euro/Sweden      EURSEK=     10.3166        10.3082     +0.08%         +4.85%      +10.3240    +10.2870
 

 (Additional reporting by Saikat Chatterjee in London
Editing by Susan Thomas)
  
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