February 28, 2019 / 5:53 PM / 4 months ago

FOREX-Dollar gains vs yen, cuts losses vs euro on U.S. GDP surprise

    * U.S. GDP rises 2.6 pct, boosts dollar
    * U.S. data does not alter path of Fed policy-analyst
    * Graphic: World FX rates in 2019: tmsnrt.rs/2egbfVh

 (Updates prices, adds comment, details)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Feb 28 (Reuters) - The dollar rose to a 10-week
high against the yen and reduced losses versus the euro on
Thursday, after U.S. data showed that growth in the world's
largest economy was stronger than expected in the fourth
    Prior to the data, the dollar index, a measure of the
greenback's value against six major currencies, had fallen to a
three-week trough.
    According to the Commerce Department report, U.S. gross
domestic product increased at a 2.6 percent annualized rate in
the fourth quarter after expanding at a 3.4 percent pace in the
July-September period. Economists had been expecting growth of
just 2.3 percent.
    The economy overall grew 2.9 percent in 2018, the best
performance since 2015, and better than the 2.2 percent in 2017.
    "For now, this points to upwards risks for the dollar, as
market pricing for further rate hikes is very cautious at less
than one interest rate hike in 2019," said Bart Hordijk, market
analyst at Monex Europe in Amsterdam.
    In midday trading, the dollar index was up slightly at 
96.201 recovering from a three-week low. Traders said
some of its weakness was caused by month-end selling after a
strong month for risky assets.
    Against the yen, the dollar rose 0.4 percent to 111.38 yen
, turning positive after the U.S. GDP data, and hitting
111.43 yen, the highest in roughly 10 weeks.
    Eric Viloria, FX strategist at Credit Agricole in New York,
said the GDP report does not change the trajectory of Federal
Reserve policy.
    "Our economists have been forecasting one more U.S.
(interest rate) hike this year, so there's no real change to
that. The GDP data is not a really surprise to the Fed," he
    The euro, meanwhile, was up 0.1 percent at $1.1379,
paring gains that took it to a three-week high.
    Core European bond yields hit a three-week high on Wednesday
while a broad indicator of European economic data
ticked higher, rising from an eight-month low hit last month,
suggesting the near-term economic outlook may be improving.
    Latest positioning data showed speculators have been ramping
up negative bets on the euro since December to a near two-year
high on concerns European policymakers won't raise interest
rates this year. 
     The safe-haven Swiss franc, meanwhile, rallied against the
dollar, which fell 0.4 percent to 0.9973 franc, after
weak Chinese factory data and after talks between U.S. President
Donald Trump and North Korean leader Kim Jong Un at their second
nuclear summit collapsed unexpectedly.
    The franc tends to rally in times of geopolitical tension.
    Trump said no deal was reached because Kim wanted all
sanctions lifted in exchange for partial denuclearization.

    In China, meanwhile, factory activity reached a three-year
low in February as export orders fell at the fastest pace since
the global financial crisis, more evidence of an economy facing
weak demand at home and abroad.
    Currency bid prices at 12:46 PM (1746 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1376        $1.1369     +0.06%         -0.81%      +1.1420     +1.1359
 Dollar/Yen       JPY=        111.3600       110.9800    +0.34%         +1.00%      +111.4300   +110.6600
 Euro/Yen         EURJPY=     126.69         126.19      +0.40%         +0.37%      +126.9000   +125.9000
 Dollar/Swiss     CHF=        0.9974         1.0014      -0.40%         +1.63%      +1.0017     +0.9927
 Sterling/Dollar  GBP=        1.3258         1.3308      -0.38%         +3.93%      +1.3324     +1.3254
 Dollar/Canadian  CAD=        1.3155         1.3154      +0.01%         -3.53%      +1.3207     +1.3141
 Australian/Doll  AUD=        0.7093         0.7138      -0.63%         +0.60%      +0.7166     +0.7091
 Euro/Swiss       EURCHF=     1.1348         1.1385      -0.32%         +0.84%      +1.1388     +1.1330
 Euro/Sterling    EURGBP=     0.8578         0.8542      +0.42%         -4.52%      +0.8586     +0.8538
 NZ               NZD=        0.6803         0.6845      -0.61%         +1.30%      +0.6854     +0.6797
 Dollar/Norway    NOK=        8.5497         8.5460      +0.04%         -1.03%      +8.5648     +8.5154
 Euro/Norway      EURNOK=     9.7266         9.7184      +0.08%         -1.81%      +9.7402     +9.7200
 Dollar/Sweden    SEK=        9.2312         9.2708      -0.36%         +2.98%      +9.2757     +9.1691
 Euro/Sweden      EURSEK=     10.5035        10.5410     -0.36%         +2.33%      +10.5580    +10.4660
 (Reporting by Gertrude Chavez-Dreyfuss; additional reporting by
Saikat Chatterjee in London; editing by Jonathan Oatis)
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