FOREX-dollar rebounds after sharp sell-off, weak data hurts euro

(Updated at 1500 EST) Karen Brettell NEW YORK, Nov 7 (Reuters) – The U.S. dollar rallied on Tuesday on the back of last week’s sharp sell-off seen as overdone in the short term, while the euro was hurt by weak German data and the Australian dollar fell after , the country’s central bank raised interest rates, but indicated that the hike was the latest in the current tightening cycle. The Japanese yen also weakened back above 150 against the dollar, a level that has kept traders on edge in recent weeks as they look for signs of intervention from Tokyo. The dollar index, which tracks the U.S. unit against six major peers, rose 0.26% to 105.52. It fell 1.4% last week, its steepest weekly decline since mid-July. “This bounce in the dollar that we’re seeing yesterday and today is really a correction of what happened last week, which I would say was a one-two punch between the Fed and the jobs data,” said Marc Chandler, chief market strategist at Bannockburn Global . Forex in New York. The U.S. currency fell last week after Federal Reserve Chairman Jerome Powell struck a more dovish tone than expected at the end of the U.S. central bank’s two-day meeting on Wednesday, leaving interest rates unchanged. A weaker-than-expected US jobs report on Friday helped weaken the dollar. “If you look at the percentage of currencies that have been down against the dollar over the past 26 weeks, it’s been close to 100%, and the data has also shown very long dollar positions… So we’ve seen some of those positions reversed. according to the jobs report,” said Chester Ntonifor, foreign exchange strategist at BCA Research. Traders now see little chance of another rate hike from the Fed, seeing three 25-point rate cuts by next November. As the US economy slows, the dollar may also see further weakness. Next week’s data is expected to show consumer price inflation softening and retail sales falling, “adding to the headwinds that people are talking about — student loan renewals, higher interest rates biting consumers,” Chandler said. “The dollar’s rally, especially since July, has been driven by divergence and now we’re going to converge – but not because of good news from overseas, but rather because we’re getting worse news from the US,” he added. This week, investors are also focusing on comments from Fed officials, including Powell, who is scheduled to speak on Wednesday and Thursday. In comments on Tuesday, Fed Governors Christopher Waller and Michelle Bowman noted a “slack” in growth for the third quarter, at an annualized 4.9%. Minneapolis Fed President Neel Kashkari also said the U.S. central bank may need to do more to push inflation back to its 2 percent target, while Chicago Fed President Austan Goolsbee said the Fed has made significant strides in its fight to reduce price pressures. The euro fell 0.20% to $1.0695 after data showed a bigger-than-expected drop in German industrial production in September. “The data comes after Germany’s manufacturing PMI showed a deep decline in October and suggests the sector remains under pressure and acting as a drag on the German economy,” said Fiona Cincotta, chief financial market analyst at City Index. The Australian dollar fell sharply after the Reserve Bank of Australia (RBA) raised interest rates by 25 basis points as expected to fight stubborn inflation, but signaled further tightening was unlikely. The Australian currency was last down 0.88% at $0.6431 and is on track for its biggest one-day percentage drop in a month. It hit a three-month high of $0.6523 on Monday. The US dollar gained 0.25% to 150.43 Japanese yen. Just last week, it softened to 151.74 per dollar, nearing the October 2022 low, which prompted several rounds of dollar selling interventions. ================================================== == ====== Currency Bid Prices at 15:00 (2000 GMT) Description RIC Last Close US Change Pct YTD Pct High Bid Low Bid Previous Session Change Dollar Index 105.5200 105.2700 +0.26% 1.962 % +105.7705 DD + EUR 951, USD 105 $1.0717 -0.20% -0.18% + $1.0720 + $1.0665 USD/JEN 150.4300 150.0700 +0.25% +14.74% +150.6850 +149.9500 Euro/Yen 160.62% +160.6% 160.6% 61.0300 +160.4400 Dollar/Swiss 0.9003 0.8994 +0.09% -2.64% +0.9018 +0.8990 GBP/USD $1.2295 $1.2339 -0.33% +1.69% +$1.2346 +$1.2264 GBP/CAD 1.3760 1.3700 +1.3700 +1.376% D +1.374% +1.374% +1.374% D lar $0.6431 $0.6489 -0.88% -5.64% +$0.6501 +$0.6405 Euro /Switzerland 0.9627 0.9638 -0.11% -2.71% +0.9647 +0.9611 Euro/Sterling 0.8695 0.8677 +0.21% -1.68% +0.8703 + 0.8703 N59% -$60.65 N59% -$60.65 0.47% + $0.5965 + $0.5913/USD/USD/Norway 11.1890 11.0600 +1.18% +14 .02% +11.2260 +11.0720 Euro/Norway 11.9669 11.8429 +1.05% +14.04% +11.9892 +11.70292 28.0289 028 028 020 000 000 000 Euro/Norway /Norway % +4.98% +10.9633 +10.8796 Euro/Sweden 11.6862 11.6889 -0.02% +4.81% +11.7124 +11.6564 (Reporting by Karen Brettell; Additional reporting by Alun John in London and Ankur Banerjee in Singapore; Editing by Paul Simao and Mark Heinrich)

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