April 30, 2019 / 3:52 PM / 2 months ago

FOREX-Euro hits 1-week peak on upbeat data, dollar retreats

    * Euro breaks above $1.12 on reduced pessimism on European
growth
    * Dollar index pulls back further from near two-year peak
    * Yen hits three-week high vs dollar after China PMI data
    * Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh

 (Updates market action, changes byline, dateline, previous
LONDON)
    By Richard Leong
    NEW YORK, April 30 (Reuters) - The euro climbed to a
one-week high against the dollar on Tuesday after first-quarter
economic growth figures on the euro zone beat market
expectations, dispelling some pessimism over the zone's common
currency.
    Mixed U.S. data and caution ahead of a two-day Federal
Reserve meeting pushed the dollar further away from a near
two-year high. 
    Euro zone economic growth accelerated to 0.4% in the first
three months of 2019, recovering from a slump in the second half
of last year, data showed on Tuesday.
    The strong data offered some relief to traders after a
disappointing manufacturing PMI survey this month and cautious
comments from European Central Bank policymakers raised concerns
that the broader economy is struggling to gain traction.
    "The (overall) data have been coming in better than
expected. The euro is the biggest short in the market right
now," said Steven Englander, global head of G10 FX research at
Standard Chartered Bank in New York.
    Higher-than-expected growth figures could squeeze some hedge
funds who have been amassing large short positions in the euro,
worth a net $14.8 billion in the week to April 23. 
 
    At 11:33 a.m. (1533 GMT), the euro was 0.16%
higher at $1.12025 after the euro zone growth data. The currency
was on track to fall 0.13% in April, bringing its year-to-date
loss against the greenback to 2.32%.
    An index that tracks the dollar against the euro, yen,
sterling and three other currencies was down 0.24% at
97.619. It hit a 23-month high at 98.330 last Friday.
    "We feel the dollar-buying move was a bit overdone,"
Englander said.
    Earlier Tuesday, data showed U.S. labor costs grew 0.7% in
the first quarter, reinforcing the notion that wage pressure
would stay tame even although hiring has remained strong, the
Labor Department said.
    Moreover, U.S. Midwest factory activity unexpectedly fell in
April to its weakest since January 2017, according to an index
from MNI and the Institute for Supply Management-Chicago. 
    Analysts expect no policy changes coming out of the Fed's
two-day policy meeting, which ends on Wednesday, but investors
want to hear how Fed Chairman Jerome Powell resolves the
divergence between solid economic growth and slowing inflation. 
  
    Trading volume was muted by Japanese markets being closed
for the Golden Week holiday. Activity will likely drop off
further on Wednesday when China and much of Europe will be off
for the May Day holiday.
    The Japanese yen rallied to a three-week high after China's
official Purchasing Managers' Index dipped to 50.1 April.

    It was up 0.23% at 111.385 yen per dollar.
========================================================
    Currency bid prices at 11:34AM (1534 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1204        $1.1185     +0.17%         -2.31%      +1.1230     +1.1176
 Dollar/Yen       JPY=        111.3600       111.6300    -0.24%         +1.00%      +111.6900   +111.2400
 Euro/Yen         EURJPY=     124.84         124.94      -0.08%         -1.09%      +125.0800   +124.4800
 Dollar/Swiss     CHF=        1.0194         1.0195      -0.01%         +3.87%      +1.0204     +1.0175
 Sterling/Dollar  GBP=        1.3035         1.2936      +0.77%         +2.18%      +1.3048     +1.2927
 Dollar/Canadian  CAD=        1.3431         1.3456      -0.19%         -1.51%      +1.3480     +1.3425
 Australian/Doll  AUD=        0.7038         0.7055      -0.24%         -0.16%      +0.7069     +0.7032
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1424         1.1403      +0.18%         +1.51%      +1.1445     +1.1389
 Euro/Sterling    EURGBP=     0.8594         0.8646      -0.60%         -4.34%      +0.8653     +0.8591
 NZ               NZD=        0.6667         0.6667      +0.00%         -0.74%      +0.6681     +0.6656
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        8.6399         8.6557      -0.18%         +0.01%      +8.6737     +8.6108
 Euro/Norway      EURNOK=     9.6815         9.6820      -0.01%         -2.27%      +9.6970     +9.6634
 Dollar/Sweden    SEK=        9.4995         9.5099      +0.09%         +5.98%      +9.5248     +9.4722
 Euro/Sweden      EURSEK=     10.6469        10.6370     +0.09%         +3.73%      +10.6565    +10.6220
      

    
 (Additional reporting by Saikat Chatterjee in LONDON and Wayne
Cole in SYDNEY
Editing by Alison Williams and James Dalgleish)
  
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