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FOREX-Dollar drops as risk appetite improves

Published 01/29/2021, 04:42 AM
Updated 01/29/2021, 04:50 AM
© Reuters.
USD/SEK
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DX
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* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

(Adds quotes, data, updates prices)
By Karen Brettell
NEW YORK, Jan 28 (Reuters) - The safe-haven U.S. dollar fell
on Thursday as risk sentiment improved after data showed that
U.S. jobless claims fell in the latest week, while dire gross
domestic product figures met expectations.
The U.S. economy contracted at its sharpest pace since World
War Two in 2020 as COVID-19 ravaged services businesses like
restaurants and airlines, throwing millions of Americans out of
work and into poverty. The Labor Department said separately that initial claims for
state unemployment benefits totaled a seasonally adjusted
847,000 for the week ended Jan. 23. That was down 67,000 from
the prior week, but claims remain well above their 665,000 peak
during the 2007-09 Great Recession.
“Incoming U.S. data was supportive of risk-taking levels,
with Q4 GDP rising close to expectations, and jobless claims
falling more than expected,” said Ronald Simpson, managing
director, global currency analysis at Action Economics.
U.S. stocks also rebounded on Thursday from sharp losses in
the prior session as earnings season got off to a strong start
and fears eased around hedge funds selling long positions to
cover shorts. The dollar index =USD fell 0.26% on the day to 90.429. It
earlier rose to 90.859, while riskier currencies including the
Australian dollar dropped to one-month lows.
The greenback was boosted by safety buying earlier this week
on concerns that U.S. fiscal stimulus will not be as large as
originally hoped, and due to the continuing spread of COVID-19
as countries struggle to roll out vaccines.
The U.S. currency has also rebounded from three-year lows
reached earlier this month on the view that last year's decline
ran too far too fast.
“There's such a tug of war right now between the longer-term
momentum…and the shorter-term term phenomenon of maybe a dollar
short squeeze,” said Erik Nelson, a macro strategist at Wells
Fargo in New York.
The dollar index is up 0.50% this month after falling 6.75%
last year.
The Australian dollar AUD=D3 gained 0.42% to $0.7695,
after earlier falling to $0.7590, the lowest since Dec. 29.
The greenback fell 0.97% against the Norwegian crown
NOK=D3 to 8.578, after earlier rising to a one-month high of
8.7286
This week investors also have been rebalancing portfolios
for month-end, which has boosted demand for the U.S. currency.
“Of late it's really been a position rebalance story,” said
Bipan Rai, North American head of FX strategy at CIBC Capital in
Toronto. “The market's still pretty short dollars.”
The euro has also been dented as European Central Bank (ECB)
policymakers step up their mentions of the euro, with the most
recent comments indicating that the ECB could cut its deposit
rate to check the strength of the continent's shared currency.
“We're starting to hear more rhetoric from the ECB that
leads me to believe that they're going to be a little bit more
active with respect to euro appreciation,” said Rai.
The euro EUR=EBS gained 0.19% to $1.2136, after earlier
falling to $1.2079.
Bitcoin BTC=BTSP rose 8.21% to $32,915, after briefly
dipping below $30,000 on Wednesday.

========================================================
Currency bid prices at 3:12PM (2012 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index =USD 90.4290 90.6690 -0.26% +0.00% +90.8590 +90.4040
Euro/Dollar EUR=EBS $1.2136 $1.2114 +0.19% -0.67% +$1.2142 +$1.2081
Dollar/Yen JPY=D3 104.2200 104.0900 +0.12% +0.89% +104.4550 +104.1500
Euro/Yen EURJPY= 126.48 126.07 +0.33% -0.35% +126.6600 +126.0000
Dollar/Swiss CHF=EBS 0.8875 0.8889 -0.15% +0.32% +0.8918 +0.8870
Sterling/Dollar GBP=D3 $1.3741 $1.3692 +0.37% +0.59% +$1.3745 +$1.3631
Dollar/Canadian CAD=D3 1.2794 1.2806 -0.09% +0.47% +1.2880 +1.2789
Aussie/Dollar AUD=D3 $0.7695 $0.7664 +0.42% +0.04% +$0.7697 +$0.7592
Euro/Swiss EURCHF= 1.0771 1.0761 +0.09% -0.33% +1.0789 +1.0753
Euro/Sterling EURGBP= 0.8829 0.8848 -0.21% -1.21% +0.8884 +0.8829
NZ NZD=D3 $0.7191 $0.7159 +0.43% +0.13% +$0.7195 +$0.7106
Dollar/Dollar
Dollar/Norway NOK=D3 8.5760 8.6650 -0.97% -0.07% +8.7275 +8.5810
Euro/Norway EURNOK= 10.4110 10.4705 -0.57% -0.54% +10.5530 +10.4040
Dollar/Sweden SEK= 8.3212 8.3523 -0.30% +1.52% +8.3990 +8.3194
Euro/Sweden EURSEK= 10.0987 10.1294 -0.30% +0.22% +10.1495 +10.0913



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