February 21, 2019 / 3:31 PM / 8 months ago

FOREX-Dollar falls vs yen, euro after soft U.S. economic data

    * U.S. economic data disappoints, weighs on dollar
    * Euro helped by firm euro zone business activity
    * Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh

 (Recasts, adds new comment, U.S. data, FX table, updates
prices, changes byline, dateline; previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Feb 21 (Reuters) - The U.S. dollar fell against
most major currencies on Thursday, hurt by weaker-than-expected
U.S. economic data that affirmed expectations the Federal
Reserve will hold interest rates this year.
    The greenback so far this week has fallen 0.4 percent, after
gaining more than 1 percent the previous week, highlighting an
uneven performance amid a mixed batch of U.S. economic reports.
    The U.S. data came a day after minutes of the Fed's monetary
policy last month said patience was needed when it came to
tightening rates, noting a pause in rate hikes gave it time to
observe the effects of past increases amid a global economic
    New orders for key U.S.-made capital goods, in particular,
unexpectedly fell in December, data showed on Thursday, amid
declining demand for machinery and primary metals, pointing to
sluggish business spending on equipment that could crimp
economic growth.
    "Overall, the durable goods data provide further reason to
think that economic growth will soon slow to below its 2 percent
potential pace, which will keep the Fed on hold throughout this
year," said Andrew Hunter, senior U.S. economist, at Capital
Economics in London.
    Thursday's data also showed that Philadelphia Fed's
manufacturing activity index dropped to a reading of -4.1 this
month from 17.0 in January. That was the first negative reading
since May 2016.
    In mid-morning trading, the dollar fell 0.2 percent against
the yen to 110.63 yen, sliding for the first time in five
    The euro also inched higher versus the dollar, up 0.1
percent at $1.1343. 
    The single European currency benefited from surveys that
showed business activity was surprisingly firm in February,
particularly in France.
    French business activity rose more than expected as
manufacturing growth helped offset the slack in services that
has dogged firms in the wake of anti-government protests, though
the German PMI number was more of a mixed picture.
    "The euro's reaction highlights the heightened sensitivity
of the currency towards any good news from Europe after recent
lackluster data," said Kamal Sharma, director of G10 FX strategy
at Bank of America Merrill Lynch in London.
    A bunch of weak data since January has undermined support
for the single currency, prompting investors to revise down
their inflation expectations for the coming months and pulled
core bond yields lower.
    A Citibank economic surprise index shows the euro zone
indicator is still wallowing near six-month lows hit last month.
    The dollar index, which measures the U.S. unit against a
basket of six major currencies, was little changed at 96.498 
    Currency bid prices at 10:05AM (1505 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1342        $1.1335     +0.06%         -1.11%      +1.1366     +1.1321
 Dollar/Yen       JPY=        110.6600       110.8500    -0.17%         +0.36%      +110.8700   +110.5800
 Euro/Yen         EURJPY=     125.52         125.67      -0.12%         -0.55%      +125.8500   +125.3300
 Dollar/Swiss     CHF=        1.0007         1.0008      -0.01%         +1.97%      +1.0022     +0.9998
 Sterling/Dollar  GBP=        1.3055         1.3049      +0.05%         +2.34%      +1.3094     +1.3027
 Dollar/Canadian  CAD=        1.3181         1.3174      +0.05%         -3.34%      +1.3207     +1.3162
 Australian/Doll  AUD=        0.7092         0.7163      -0.99%         +0.61%      +0.7207     +0.7087
 Euro/Swiss       EURCHF=     1.1352         1.1349      +0.03%         +0.87%      +1.1368     +1.1344
 Euro/Sterling    EURGBP=     0.8685         0.8685      +0.00%         -3.33%      +0.8703     +0.8666
 NZ               NZD=        0.6816         0.6855      -0.57%         +1.47%      +0.6876     +0.6806
 Dollar/Norway    NOK=        8.6222         8.5895      +0.38%         -0.19%      +8.6441     +8.5813
 Euro/Norway      EURNOK=     9.7809         9.7382      +0.44%         -1.26%      +9.7914     +9.7368
 Dollar/Sweden    SEK=        9.3520         9.3203      +0.36%         +4.33%      +9.3637     +9.3034
 Euro/Sweden      EURSEK=     10.6075        10.5692     +0.36%         +3.36%      +10.6311    +10.5591
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Saikat Chatterjee in London; Editing by Bernadette Baum)
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