(Recasts after start of European trade, changes dateline from
* Dollar falls back from a 14-year-high on profit-taking
* Several U.S. economic indicators due Thursday
* Euro edges up, hopes for Monte dei Paschi rescue
* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh
By Jemima Kelly
LONDON, Dec 22 The dollar dipped for a second
day on Thursday as traders booked profits ahead of a batch of
U.S. data later in the day, though the greenback was still
trading less than a percent away from a 14-year high touched
earlier in the week.
The U.S. currency has surged since last week, when the U.S.
Federal Reserve hinted that interest rates would be increased
three times in 2017 after its first rate hike in a year, with
the dollar index - which measures the greenback against six
major peers - hitting its highest since December 2002.
It had already been climbing in the wake of Donald Trump's
victory in the U.S. presidential elections six weeks ago, up 5
percent since then, with investors betting the president-elect's
planned tax cuts and increased spending in areas like
infrastructure will boost growth and inflation, leading to
higher interest rates.
The dollar dipped 0.1 percent on Thursday, having also
fallen around a quarter of a percent on Wednesday. But analysts
said this week's moves must be viewed in the context of thin
liquidity, and there was no clear evidence to suggest the
dollar's rally had run out of steam.
"It think we're pausing - I think the story about U.S. rates
has got further to run at the start of next year, when Trump
presents his wish-list on the budget," said ING currency
strategist Chris Turner, in London.
"We see U.S. 10-year yields pushing up to 2.75 percent in
Q1, so we think there's a bit more dollar strength to come."
U.S. 10-year Treasury yields have climbed 70 basis points
since Trump's election to as high as 2.6 percent, driving the
While trade is expected to slow further ahead of Christmas
on Sunday, the market's near-term focus is on U.S. economic
indicators due on Thursday, including revised GDP for July to
September, durable goods orders for November, and weekly initial
The euro was up 0.2 percent at $1.0448, rebounding
from $1.0352 on Tuesday, the lowest since January 2003. Some
analysts linked its modest rise to plans to rescue Montei dei
Paschi di Siena, Italy's second-biggest bank.
Others, though, said the single currency's movements were
more related to temporary weakness in the dollar.
"What we might be seeing is when you've had such a strong
run, like we've seen in the dollar, and you go into a period
where liquidity is thin ... people take profit and close out
some positions," said HSBC currency strategist Dominic Bunning,
For Reuters new Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Additional reporting by Yuzuha Oka in Tokyo; Editing by Alison
Williams and Toby Chopra)