October 11, 2018 / 3:06 PM / 5 days ago

FOREX -Dollar falls on lower bond yields, U.S. CPI miss

    * U.S. 10-year Treasury yield retreats to one-week low
    * U.S. September consumer price data weaker than expected 
    * Euro gains as minutes signal ECB on track to pare stimulus
    * Swedish crown jumps on upbeat inflation, home price data 
    * Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh

 (Updates market action, changes dateline, previous LONDON)
    By Richard Leong
    NEW YORK, Oct 11 (Reuters) - The dollar weakened to a near
two-week low on Thursday against a basket of currencies as
traders reduced their greenback holdings on lower U.S. Treasury
yields and a weaker-than-forecast rise in domestic consumer
prices in September.
    The euro climbed to a one-week peak against the
dollar as minutes on the European Central Bank's policy meeting
last month suggested policy-makers have not abandoned their plan
to end its 2.6 trillion euro bond purchase program this year. 
    Among other major currencies, the Swedish crown jumped
following stronger-than-expected inflation and home price data,
raising prospects for the Riksbank to increase interest rates in
December, analysts said.
    The Chinese yuan stabilized in offshore trading, rebounding
from early weakness due to a global equity rout. Traders 
brushed off comments from U.S. President Donald Trump signaling
he is not backing off an escalating his trade war with Beijing.

    "Yields have pulled back and you have softer inflation data.
This puts a question on the number of Fed rate hikes in 2019,"
said Minh Trang, senior FX trader at Silicon Valley Bank in
Santa Clara, California.
    The U.S. Labor Department said on Thursday its consumer
price index rose 0.1 percent in September, less than the 0.2
percent increase forecast among analysts polled by Reuters.

    The CPI miss reduced bets U.S. inflation is accelerating,
spurring appetite for U.S. government bonds. This added to the
safe-haven bid for Treasuries stemming from a dramatic sell-off
in overseas stock markets that followed big losses in the S&P
500 and Dow on Wednesday.
    An index that tracks the dollar versus six currencies
fell to 94.987, the lowest since Sept. 28. At 10:50 a.m. (1450 
GMT), the dollar index was down 0.32 percent at 95.205.
    The benchmark 10-year Treasury yield fell to a
one-week low at 3.1686 percent. It reached a seven-year peak at
3.261 percent on Tuesday.
    Forecasts from Fed officials released last month showed they
expected three rate hikes in 2019, while some of them have said
they are open to a rate increase in December, which would be the
fourth this year.
    Their counterparts at the ECB seemed on track, based on the
latest minutes, to normalize their ultra loose policy later this
year despite concerns about slowing growth in Europe.

    The common currency was up 0.42 percent at
$1.15660 after touching a one-week high. It was 0.43 percent
higher at 129.850 yen.
    The Swedish crown was 1.46 percent higher at 8.9980 per
dollar and 1.09 stronger at 10.4099 per euro.
    Offshore yuan rose 0.4 percent to 6.8960 per
dollar, rebounding from an eight-week low set earlier on
Thursday. 
========================================================
    Currency bid prices at 10:52AM (1452 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1564        $1.1518     +0.40%         -3.60%      +1.1599     +1.1520
 Dollar/Yen       JPY=        112.2400       112.2700    -0.03%         -0.38%      +112.5300   +111.9800
 Euro/Yen         EURJPY=     129.84         129.32      +0.40%         -3.95%      +130.2000   +129.2200
 Dollar/Swiss     CHF=        0.9888         0.9899      -0.11%         +1.49%      +0.9903     +0.9857
 Sterling/Dollar  GBP=        1.3222         1.3194      +0.21%         -2.15%      +1.3246     +1.3184
 Dollar/Canadian  CAD=        1.3045         1.3066      -0.16%         +3.74%      +1.3068     +1.3025
 Australian/Doll  AUD=        0.7115         0.7060      +0.78%         -8.79%      +0.7129     +0.7047
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1437         1.1404      +0.29%         -2.16%      +1.1442     +1.1393
 Euro/Sterling    EURGBP=     0.8745         0.8730      +0.17%         -1.55%      +0.8764     +0.8729
 NZ Dollar/Dolar  NZD=        0.6518         0.6447      +1.10%         -8.02%      +0.6524     +0.6447
 Dollar/Norway    NOK=        8.2169         8.2348      -0.22%         +0.12%      +8.2421     +8.1908
 Euro/Norway      EURNOK=     9.5041         9.4876      +0.17%         -3.50%      +9.5178     +9.4764
 Dollar/Sweden    SEK=        9.0008         9.1422      -1.10%         +9.74%      +9.1422     +8.9663
 Euro/Sweden      EURSEK=     10.4090        10.5249     -1.10%         +5.79%      +10.5359    +10.3750
     

 (Additional reporting by Saikat Chatterjee in LONDON
Editing by David Stamp and Dan Grebler)
  
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