FOREX-Dollar heads for weekly loss as traders shrug off taper talk

    * Graphic: World FX rates

    By Tom Westbrook
    SINGAPORE, May 21 (Reuters) - The dollar was pinned near
milestone lows on Friday, and headed for a weekly loss, as
traders' initial concerns at taper talk in Federal Reserve
minutes ebbed - with actual tapering seeming distant  - while
pandemic recovery boosted other currencies.
    On Wednesday, minutes from the April Fed meeting noted some
committee members think that if the economy keeps improving, it
might be appropriate, at upcoming meetings, to "begin discussing
a plan for adjusting the pace of asset purchases".
    But after bouncing off a four-month low on the euro as the
mere mention of tapering policy prompted fears of early rate
rises, the dollar has dropped back and, at $1.2225 per euro
, is again testing major support around $1.2345.
    The dollar index is at 89.795, just a fraction above
a three-month low of 89.686 struck before the Fed minutes were
published. The index, which measures the greenback against six
major currencies, is down about 0.6% for the week so far.
    Against the yen the dollar was steady in Asia on
Friday at 108.84, having dropped about 0.5% on the week.
Cryptocurrencies have also staged a comeback, with bitcoin
 at $41,171 sitting some 37% above Wednesday's low.
    "It has been just over 24 hours since markets got spooked by
the prospect of the U.S. Fed tapering its asset purchases, but
having proverbially slept on it, the mood seems less sour
today," ANZ analysts said in a note. "Which seems reasonable –
it's not like the Fed is on the brink of wanting to actually
    A future discussion on tapering is also already reflected in
the pricing of U.S. Treasuries and in money markets after the
heavy selling of government bonds through February and March,
limiting further dollar gains from the Fed minutes.
    Benchmark 10-year Treasury yields fell to
1.6340% overnight and have range-traded between roughly 1.5% and
1.7% for two months, after jumping by more than 80 basis points
in the first quarter of 2021. Fed Funds futures price the first
full rate hike by January 2023.
    "The world was, is and will remain awash with cheap
dollars," said Societe Generale strategist Kit Juckes.
    "As long as the Fed is talking about talking about tapering,
Treasuries are likely to remain stuck in their range and the
dollar's path of least resistance is to go on falling, albeit
    Elsewhere among major currencies, moves were slight as
traders awaited retail sales data in Australia and Purchasing
Managers' Index figures across Europe.
    The Australian and New Zealand dollars, which are near
multi-year highs as lofty commodity prices and strong pandemic
recoveries provide support, looked to close the week broadly
    The kiwi last bought $0.7198 and the Aussie
    Sterling is perched close to its highest since 2018
as high vaccination rates support a stronger-than-expected
economic recovery. Analysts said retail sales figures, as well
as May PMIs later on Friday might deliver a further boost.
    Sterling last traded steady at $1.4185.
    Currency bid prices at 0039 GMT
 Descriptio  RIC           Last      U.S. Close  Pct     YTD Pct  High Bid    Low Bid
 n                                    Previous   Change   Change              
 Euro/Dolla                $1.2234   $1.2229     +0.04%  +0.14%   +1.2238     +1.2224
 Dollar/Yen                108.8450  108.8000    +0.05%  +5.39%   +108.8750   +108.8200
 Euro/Yen                  133.15    133.03      +0.09%  +4.91%   +133.2000   +132.9800
 Dollar/Swi                0.8969    0.8974      -0.05%  +1.38%   +0.8976     +0.8969
 Sterling/D                1.4186    1.4190      -0.02%  +3.84%   +1.4194     +1.4185
 Dollar/Can                1.2059    1.2059      +0.00%  -5.30%   +1.2068     +1.2057
 Aussie/Dol                0.7772    0.7773      -0.01%  +1.03%   +0.7778     +0.7769
 NZ                        0.7198    0.7205      -0.08%  +0.24%   +0.7203     +0.7196
 lar All spots
Tokyo spots
Europe spots 
Tokyo Forex market info from BOJ

 (Reporting by Tom Westbrook.)