November 20, 2018 / 3:17 PM / 6 months ago

FOREX-Dollar rebounds from 2-week low as risk sentiment worsens

    * Euro falls as risk sentiment sours
    * Yen, Swiss franc both gain on safe-haven bids
    * Tech share slide, Fed caution had earlier hobbled dollar
    * Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh

 (Recasts, adds comment, FX table, updates prices, changes
byline, dateline; previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Nov 20 (Reuters) - The dollar rallied from a
two-week low on Tuesday as a sell-off in world stock markets
spurred safe-haven bids and investors worried about slowing
global growth.
    Other safe-haven currencies such as the yen and Swiss franc
gained as well.
    "Dovish comments from the Fed that the world economy may be
cooling off has dented investors' sentiment," said Viash
Sreemuntoo, corporate trader at online FX broker XE. 
    Earlier, cautious comments overnight by Federal Reserve
officials about the global economic outlook knocked the dollar
to two-week troughs as it suggested the Fed could slow the pace
of raising interest rates or that the tightening cycle is
ending.
    In midmorning trading, the dollar index, a measure of its
value against a basket of six major currencies, rose 0.3 percent
to 96.510, off its weakest level since Nov. 7.
    "With investors holding significant long U.S. dollar
exposure, especially versus the yen, we think the dollar remains
at risk of weakening further if the market's doubts about the
Fed outlook are sustained – or increase further – especially as
the broader dollar lift associated with seasonal demand around
this time of year is typically at or close to a peak by now,"
said Shaun Osborne, chief FX strategist at Scotiabank in
Toronto.
    The euro also gave up its gains, spooked by a slide in
European equities. Italian bank shares hit a two-year low and
Italian bonds sold off again amid a continuing confrontation
with the European Union over Rome's budget plans.
    Europe's single currency was last down 0.4 percent at
$1.1401, off a two-week high earlier.  
    Persisting worries about the China-U.S. trade conflict and
Brexit negotiations also kept investors jittery.
    With investor nerves high, the yen added 0.1 percent to
112.48. 
    U.S. 10-year Treasury yields pulled back,
removing some support for the greenback.
    The dollar was also weighed down by weak U.S. data.

    "For the U.S. equity market to stabilize, either the rest of
the world will have to show better growth or the Fed will have
to moderate its stance," Hans Redeker, global head of FX
strategy, at Morgan Stanley, wrote in a client note.
    "Both outcomes are U.S. dollar-negative and explain why
rising U.S. equity volatility has failed to spill over into
emerging markets."
    Sterling was slightly lower against the dollar, but
was firmer against the euro as Prime Minister Theresa
May heads to Brussels for more Brexit talks. 
    In the cryptocurrency market, bitcoin lost another 10
percent to below $4,500 as sentiment soured further.

    
        Currency bid prices at 10:01AM (1501 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1397        $1.1451     -0.47%         -4.99%      +1.1472     +1.1394
 Dollar/Yen       JPY=        112.3900       112.5400    -0.13%         -0.27%      +112.6600   +112.3100
 Euro/Yen         EURJPY=     128.15         128.91      -0.59%         -5.22%      +129.0200   +128.1300
 Dollar/Swiss     CHF=        0.9932         0.9935      -0.03%         +1.94%      +0.9943     +0.9910
 Sterling/Dollar  GBP=        1.2831         1.2849      -0.14%         -5.04%      +1.2882     +1.2824
 Dollar/Canadian  CAD=        1.3245         1.3170      +0.57%         +5.31%      +1.3246     +1.3155
 Australian/Doll  AUD=        0.7251         0.7293      -0.58%         -7.05%      +0.7300     +0.7252
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1323         1.1378      -0.48%         -3.15%      +1.1382     +1.1320
 Euro/Sterling    EURGBP=     0.8880         0.8912      -0.36%         -0.03%      +0.8922     +0.8876
 NZ               NZD=        0.6814         0.6836      -0.32%         -3.84%      +0.6869     +0.6816
 Dollar/DolLar                                                                                  
 Dollar/Norway    NOK=        8.5497         8.4756      +0.87%         +4.15%      +8.5504     +8.4558
 Euro/Norway      EURNOK=     9.7467         9.7087      +0.39%         -1.03%      +9.7477     +9.6966
 Dollar/Sweden    SEK=        9.0617         9.0012      +0.19%         +10.47%     +9.0618     +8.9873
 Euro/Sweden      EURSEK=     10.3290        10.3097     +0.19%         +4.98%      +10.3300    +10.3030
 
    
 (Reporting by Gertrude Chavez-Dreyfuss; additional reporting by
Tommy Wilkes in London; editing by Jonathan Oatis)
  
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