SPX3,998.84-72.86 -1.79%
DIA340.03-4.71 -1.37%
IXIC11,239.94-221.56 -1.93%

FOREX-Dollar loses ground after economic data boosts risk appetite

Reuters · 11/15/2022 10:56
FOREX-Dollar loses ground after economic data boosts risk appetite

Updates prices, adds New York dateline, adds commentary

By Sinéad Carew and Joice Alves


-
The U.S. dollar lost ground to other currencies including the euro, the yen and sterling after U.S. economic data provided further evidence that inflation was starting to ease, improving investor appetite for riskier assets and reducing demand for the safe-haven greenback.


The U.S. producer price index (PPI) increased 8.0% for the 12 months through
October
compared with
economist expectations
for 8.3% and September's 8.4% increase, according to the Labor Department data.


The report, following last week's smaller-than-expected increase in consumer prices for October, encouraged investors who have been closely monitoring inflation data for signs that the Federal Reserve could slow its interest rate hikes, which are aimed at dampening soaring prices.


"Risk appetite has improved. That tends to weaken the dollar," said Karl Schamotta, chief market strategist at payments company, Corpay.


"Fed officials will to see many months of this before they pause the rate hike cycle but overall price pressures appear to be going in the right direction."


Schamotta says the dollar likely peaked in September but he also see a risk for a short-term "sell-off in risk-sensitive currencies and a rally in the dollar if there is a U.S. government funding squeeze before year end."

Before the U.S. data the euro, sterling and the Swedish crown had already risen sharply against the U.S. dollar as traders assessed a slew of economic data, including UK and euro zone job figures plus German economic sentiment.

The euro EUR=EBS was last up 0.79% at $1.0407 after earlier touching its highest since July 1. In Europe traders were also eying encouraging data such as German economic sentiment ZEW index, which rose in November.

"Due to concerns about a deep recession over the winter the index had completely collapsed recently. In view of the mild start to the winter heating period and the well-filled gas stores analysts are likely to have got their hopes up that things might turn out to be quite so bad," said Antje Praefcke, FX Analyst at Commerzbank.

Data also showed employment in the single currency area rose in the third quarter.

Jane Foley, head of FX strategy at Rabobank in London also pointed to other headlines supporting risk currencies against the dollar. She saw U.S. President Joe Biden's summit meeting with Chinese leader Xi Jinping as an indication that tensions between the two countries may have cooled, and also mentioned Russia’s withdrawal from Kherson in Ukraine.

The dollar index .DXY, which measures the currency against six counterparts including sterling and euro, was last down 0.46% at 106.162 after earlier touching 105.34, its lowest point since August.

The greenback was last down 0.68% against Japan's yen JPY=EBS at 138.975.

The Swedish crown SEK=D3 rose sharply against the U.S. dollar after data showed inflation in Sweden rose less than expected in October. The dollar was last down 0.19% at 10.3831 crowns.

Sterling GBP=D3 was up 1.56% at $1.1941 after earlier rising as much as 2.27%, which put it at a three-month high against the dollar.

This was ahead of a tough UK government budget plan due out later this week and after data showing Britain's unemployment rate unexpectedly rose and vacancies fell for a fifth report in a row as employers worried about the economy.

========================================================

Currency bid prices at 10:05AM (1505 GMT)

Description

RIC

Last

U.S. Close
Previous
Session

Pct Change

YTD Pct
Change

High Bid

Low Bid

Euro/Dollar

EUR=EBS

$1.0407

$1.0325

+0.79%

-8.46%

+$1.0481

+$1.0312

Dollar/Yen

JPY=EBS

138.9750

139.9250

-0.68%

+20.73%

+140.6000

+137.6650

Euro/Yen

EURJPY=

144.63

144.44

+0.13%

+10.98%

+145.3600

+144.2300

Dollar/Swiss

CHF=EBS

0.9434

0.9431

+0.07%

+3.47%

+0.9453

+0.9357

Sterling/Dollar

GBP=D3

$1.1942

$1.1760

+1.56%

-11.69%

+$1.2028

+$1.1745

Dollar/Canadian

CAD=D3

1.3305

1.3316

-0.05%

+5.26%

+1.3335

+1.3226

Aussie/Dollar

AUD=D3

$0.6732

$0.6702

+0.43%

-7.40%

+$0.6797

+$0.6686

Euro/Swiss

EURCHF=

0.9817

0.9738

+0.81%

-5.32%

+0.9840

+0.9727

Euro/Sterling

EURGBP=

0.8712

0.8783

-0.81%

+3.71%

+0.8805

+0.8712

NZ Dollar/Dollar

NZD=D3

$0.6145

$0.6097

+0.77%

-10.24%

+$0.6203

+$0.6087

Dollar/Norway

NOK=D3

9.9365

10.0310

-0.99%

+12.74%

+10.0485

+9.8930

Euro/Norway

EURNOK=

10.3434

10.3629

-0.19%

+3.30%

+10.3967

+10.3207

Dollar/Sweden

SEK=

10.3831

10.4750

-0.19%

+15.14%

+10.5043

+10.3049

Euro/Sweden

EURSEK=

10.8020

10.8221

-0.19%

+5.55%

+10.8423

+10.7840


(Reporting by Sinéad Carew in New York and Joice Alves in London; Editing by Andrew Cawthorne, Angus MacSwan and Andrea Ricci)

((sinead.carew@thomsonreuters.com))