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Dollar touches three-week high, lifted by recent data, Fed taper view

09/17/2021 | 03:11pm EDT
FILE PHOTO: U.S. One dollar banknotes are seen in front of displayed stock graph in this illustration taken

NEW YORK (Reuters) -The dollar scaled three-week peaks on Friday, supported by better-than-forecast U.S. retail sales data released on Thursday that backed expectations for a reduction of asset purchases by the Federal Reserve before the end of the year.

The dollar index, a gauge of the greenback's value against six major currencies, rose to 93.220, the highest since the third week of August. It was last up 0.4% at 93.207.

For the week, the dollar index gained 0.6%, its largest weekly percentage rise since mid-August.

The Fed holds a two-day monetary policy meeting next week and is expected to open discussions on reducing its monthly bond purchases, while tying any actual change to U.S. job growth in September and beyond.

"While we doubt that the FOMC will set out a plan for tapering its asset purchases, the new economic projections may shed some light on its reaction function given building cyclical inflationary pressures," wrote Jonathan Petersen, markets economist at Capital Economics, in its latest research note.

"Our view remains that inflation in the U.S. will stay elevated for longer than the FOMC and investors currently anticipate, in turn supporting higher U.S. yields and a stronger dollar," he added.

Speculation about a Fed taper this year gathered pace after U.S. retail sales unexpectedly increased in August, data showed on Thursday, rising 0.7% from the previous month despite expectations of a 0.8% fall. A business sentiment survey also showed a big improvement.

In afternoon New York trading, the euro slid 0.3% to $1.1729, after hitting a three-week low of $1.1724 earlier in the session.

The University of Michigan consumer sentiment for September inched higher to 71 versus the final August reading of 70.3, but overall analysts said the rise was nowhere near the improvements seen in the Empire States and Philadelphia Fed manufacturing surveys.

The dollar held gains after the Michigan sentiment report.

Currency markets were generally quiet on Friday with traders reluctant to take on new positions ahead of a clutch of important central bank meetings next week including the Fed, the Bank of Japan and the Bank of England.

The dollar was up 0.5% against the Swiss franc at 0.9320 francs, after earlier hitting a five-month high of 0.9324 francs .

The dollar rose 0.2% to 109.92 yen.

The yen has shown limited reaction to the ruling Liberal Democratic Party's leadership race, which formally kicks off on Friday ahead of a Sept. 29 vote. The LDP's parliamentary dominance means the party's new leader will become prime minister.

The dollar also rose to a two-week high against the offshore yuan and was last up 0.3% at 6.4711. The yuan is being pressured by growing worries about China's real estate sector as investors fear property giant China Evergrande could default on its coupon payment next week.

The British pound fell 0.4% to $1.3738 as UK retail sales undershot expectations. However, with investors bringing forward forecasts for a Bank of England interest rate hike to mid-2022, sterling remains supported.

========================================================

Currency bid prices at 2:59PM (1859 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 93.1820 92.8730 +0.35% 3.557% +93.2200 +92.7600

Euro/Dollar $1.1729 $1.1768 -0.33% -4.00% +$1.1789 +$1.1724

Dollar/Yen 109.9250 109.7500 +0.16% +6.39% +110.0750 +109.6700

Euro/Yen 128.93 129.13 -0.15% +1.58% +129.6600 +128.9200

Dollar/Swiss 0.9323 0.9279 +0.46% +5.36% +0.9324 +0.9261

Sterling/Dollar $1.3737 $1.3792 -0.38% +0.57% +$1.3812 +$1.3736

Dollar/Canadian 1.2742 1.2685 +0.44% +0.05% +1.2762 +1.2638

Aussie/Dollar $0.7273 $0.7295 -0.30% -5.45% +$0.7321 +$0.7266

Euro/Swiss 1.0933 1.0915 +0.16% +1.17% +1.0935 +1.0906

Euro/Sterling 0.8535 0.8528 +0.08% -4.50% +0.8553 +0.8523

NZ $0.7040 $0.7076 -0.53% -1.99% +$0.7086 +$0.7026

Dollar/Dollar

Dollar/Norway 8.6910 8.6385 +0.69% +1.29% +8.7075 +8.5925

Euro/Norway 10.1958 10.1410 +0.54% -2.59% +10.2139 +10.1136

Dollar/Sweden 8.6743 8.6210 +0.31% +5.83% +8.6896 +8.6038

Euro/Sweden 10.1750 10.1435 +0.31% +0.98% +10.1965 +10.1370

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Muralikumar Anantharaman, Alex Richardson and Sonya Hepinstall)

By Gertrude Chavez-Dreyfuss


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / BRITISH POUND (AUD/GBP) 0.09% 0.54652 Delayed Quote.-2.95%
AUSTRALIAN DOLLAR / CHINESE YUAN RENMINBI (AUD/CNY) 0.19% 4.812087 Delayed Quote.-4.59%
AUSTRALIAN DOLLAR / EURO (AUD/EUR) 0.17% 0.64761 Delayed Quote.2.84%
AUSTRALIAN DOLLAR / JAPANESE YEN (AUD/JPY) 0.10% 85.426 Delayed Quote.8.03%
AUSTRALIAN DOLLAR / SWISS FRANC (AUD/CHF) 0.35% 0.69094 Delayed Quote.1.37%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.20% 0.75178 Delayed Quote.-2.36%
BRITISH POUND / CHINESE YUAN RENMINBI (GBP/CNY) 0.21% 8.801456 Delayed Quote.-1.54%
BRITISH POUND / EURO (GBP/EUR) 0.06% 1.18478 Delayed Quote.6.08%
BRITISH POUND / JAPANESE YEN (GBP/JPY) 0.01% 156.261 Delayed Quote.11.41%
BRITISH POUND / SWISS FRANC (GBP/CHF) 0.25% 1.26396 Delayed Quote.4.73%
BRITISH POUND / US DOLLAR (GBP/USD) 0.14% 1.37524 Delayed Quote.0.66%
CANADIAN DOLLAR / BRITISH POUND (CAD/GBP) -0.05% 0.588318 Delayed Quote.1.89%
CANADIAN DOLLAR / CHINESE YUAN RENMINBI (CAD/CNY) 0.09% 5.1752 Delayed Quote.0.47%
CANADIAN DOLLAR / EURO (CAD/EUR) 0.04% 0.697136 Delayed Quote.8.14%
CANADIAN DOLLAR / JAPANESE YEN (CAD/JPY) -0.04% 91.918 Delayed Quote.13.60%
CANADIAN DOLLAR / SWISS FRANC (CAD/CHF) 0.20% 0.74354 Delayed Quote.6.84%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) 0.09% 0.80891 Delayed Quote.2.77%
CHINA EVERGRANDE GROUP -0.78% 2.54 End-of-day quote.-82.95%
CHINESE YUAN RENMINBI / SWISS FRANC (CNY/CHF) -0.03% 0.143599 Delayed Quote.6.27%
DANISH KRONE / SWISS FRANC (DKK/CHF) -0.17% 14.288 Delayed Quote.-0.65%
DOW JONES FXCM DOLLAR INDEX -0.03% 11999.48 Delayed Quote.2.87%
EURO / BRITISH POUND (EUR/GBP) -0.08% 0.84388 Delayed Quote.-5.71%
EURO / CHINESE YUAN RENMINBI (EUR/CNY) 0.15% 7.4225 Delayed Quote.-7.16%
EURO / JAPANESE YEN (EUR/JPY) -0.07% 131.85 Delayed Quote.5.11%
EURO / SWISS FRANC (EUR/CHF) 0.17% 1.06664 Delayed Quote.-1.34%
EURO / US DOLLAR (EUR/USD) 0.06% 1.16058 Delayed Quote.-5.06%
HONGKONG-DOLLAR / SWISS FRANC (HKD/CHF) 0.13% 11.817 Delayed Quote.3.60%
INDIAN RUPEE / BRITISH POUND (INR/GBP) 0.03% 0.009708 Delayed Quote.-3.16%
INDIAN RUPEE / CHINESE YUAN RENMINBI (INR/CNY) 0.25% 0.085426 Delayed Quote.-4.59%
INDIAN RUPEE / EURO (INR/EUR) 0.15% 0.011504 Delayed Quote.2.76%
INDIAN RUPEE / JAPANESE YEN (INR/JPY) -0.02% 1.516967 Delayed Quote.7.91%
INDIAN RUPEE / SWISS FRANC (INR/CHF) 0.21% 0.012266 Delayed Quote.1.39%
INDIAN RUPEE / US DOLLAR (INR/USD) 0.17% 0.013355 Delayed Quote.-2.47%
JAPANESE YEN / SWISS FRANC (JPY/CHF) 0.12% 0.8089 Delayed Quote.-6.04%
NEW ZEALAND DOLLAR / JAPANESE YEN (NZD/JPY) 0.06% 81.537 Delayed Quote.10.41%
NEW ZEALAND DOLLAR / SWISS FRANC (NZD/CHF) 0.30% 0.65955 Delayed Quote.3.69%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.19% 0.71762 Delayed Quote.-0.18%
RUSSIAN ROUBLE / SWISS FRANC (RUB/CHF) 0.21% 0.013043 Delayed Quote.10.64%
SINGAPORE-DOLLAR / SWISS FRANC (SGD/CHF) 0.24% 0.6821 Delayed Quote.1.99%
SWEDISH KRONA / SWISS FRANC (SEK/CHF) 0.03% 0.107035 Delayed Quote.-0.76%
UNITED STATES DOLLAR (B) / CHINESE YUAN IN HONG KONG (USD/CNH) 0.00% 6.3922 Delayed Quote.-1.58%
US DOLLAR / BRITISH POUND (USD/GBP) -0.14% 0.727167 Delayed Quote.-0.66%
US DOLLAR / CHINESE YUAN RENMINBI (USD/CNY) 0.10% 6.3965 Delayed Quote.-2.19%
US DOLLAR / EURO (USD/EUR) -0.05% 0.861772 Delayed Quote.5.33%
US DOLLAR / JAPANESE YEN (USD/JPY) -0.13% 113.622 Delayed Quote.10.65%
US DOLLAR / SWISS FRANC (USD/CHF) 0.09% 0.919 Delayed Quote.3.94%
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