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FOREX-Dollar pressured by sterling's rebound from selloff
October 12, 2016 / 12:47 AM / a year ago

FOREX-Dollar pressured by sterling's rebound from selloff

* Pound seen aided by Bloomberg report on May’s Brexit plan

* DXY slips from 7-month highs hit on rate hike expectations

TOKYO, Oct 12 (Reuters) - The dollar slumped in early Asian trading on Wednesday, pressured by sterling’s partial rebound from its dramatic losses in the previous session.

The pound was up 1.4 percent at $1.2287, after tumbling as low as $1.2086 on Tuesday, heading towards last Friday’s 31-year low of $1.1450 hit as investors feared the impact on Britain from quitting the European Union.

Sterling benefited from a Bloomberg report that British Prime Minister Theresa May has accepted that Parliament should be allowed to vote on her Brexit plan.

“May will accept voting at the Parliament, which is giving the pound a short-term boost, but I‘m not sure it’s long-lasting,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.

“It’s latest fall was too much and too rapid, so it’s natural to see some rebound,” he said. “It seems the dollar’s weakness against sterling today is affecting the other dollar currency pairs as well, which is also natural.”

The dollar index, which tracks the greenback against a basket of six major rivals, slipped 0.2 percent to 97.533 after rising as high as 97.758 on Tuesday, its loftiest peak since March.

The dollar edged down 0.1 percent to 103.40 yen, while the euro was steady at $1.1054, recovering from a dip as low as $1.1049, its deepest nadir since early August.

The dollar had been on an upswing due to rising expectations that the U.S. Federal Reserve would raise interest rates as early as this year, with markets pricing in around a 70 percent chance of a hike in December.

Investors awaited the minutes of the Federal Reserve Open Market Committee’s September meeting, scheduled to be released later on Wednesday, as well as U.S. retail sales data on Friday, for clues as to how close the U.S. central bank is coming to hiking interest rates.

The dollar has also benefited as Democratic presidential nominee Hillary Clinton widened her lead in opinion polls over Republican rival Donald Trump.

Reporting by Tokyo markets team; Editing by Eric Meijer

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