FOREX-Dollar holds near 2-week high after strong U.S. retail data

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* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

* US retail sales data temper views of Fed cutting ratesthis week

* Weakness in euro, antipodean currencies also seen buoyingdollar

TOKYO, June 17 (Reuters) - The dollar hovered near atwo-week high early on Monday, as strong U.S. retail sales datatempered some of the fears about a sharp downturn in the world'slargest economy.

That provided some relief to the dollar ahead of the Federal Reserve's policy meeting this week. While few expect theFed to cut rates at Wednesday's policy review, traders arewagering that policy makers will do just that in coming months. urn:newsml:reuters.com:*:nLNSEHEF5I

The dollar index .DXY versus a basket of six majorcurrencies was little changed at 97.509 after rising to 97.583on Friday, its highest since June 3.

The index had declined to a 2-1/2-month low of 96.459 alittle more than a week ago after a weak U.S. jobs reportheightened Fed rate cut prospects.

Expectations of an interest rate cut at the Fed's June 18-19meeting fell from 28.3% on Thursday to 21.7% according to CMEGroup's FedWatch tool. But bets of an easing at the July meetingremain high at 85%.

"In addition to the upbeat U.S. data, the dollar issupported by weakness in other currencies, notably the euro andantipodeans," said Junichi Ishikawa, senior FX strategist at IGSecurities in Tokyo.

"The Fed might cut rates sooner or later but so might itsantipodean counterparts as well as the European Central Bank,and such views put the dollar at an advantage."

With growth slowing and inflation staying well below the itstarget, the ECB recently raised the prospect of even morestimulus, arguing that a rate cut or even more asset purchasesmay become necessary.

The central banks of Australia and New Zealand face asimilar predicament as the global economy braces for falloutfrom the U.S.-China trade conflict.

Australian bond yields slipped to a record low last week asinvestors priced in further easing by the Reserve Bank ofAustralia, which already cut rates to a record low 1.25% earlierthis month.

The euro was little changed at $1.1216EUR= after sheddingabout 0.6% on Friday, when it fell to an eight-day trough of$1.1203.

The Australian dollar AUD=D4 crawled up 0.1% to $0.6878but remained within reach of a five-month low of $0.6862 set onFriday, when the currency retreated nearly 0.7%.

The New Zealand dollar NZD=D4 , which slumped more than 1%during the previous session, traded near a three-week low of$0.6488 brushed towards the end of last week.

The dollar was flat at 108.570 yenJPY= after edging up0.15% on Friday. (Reporting by Shinichi SaoshiroEditing by Shri Navaratnam) ((shinichi.saoshiro@thomsonreuters.com; Reuters Messaging:shinichi.saoshiro.reuters.com@reuters.net+813-6441-1774))

This article appears in: Politics , Stocks , World Markets , Economy
Referenced Symbols: EUR

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