FOREX-Dollar tumbles to 1-month low on U.S. rate outlook, growth concerns

* Dollar on pace to post daily largest loss in 6 weeks

* Sweden's central bank raises rates, boosts krona

* U.S. repatriation flows slow, pressures dollar

* Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh (Adds comment, FX table, updates prices, changes byline,dateline; previous LONDON)

By Gertrude Chavez-Dreyfuss

NEW YORK, Dec 20 (Reuters) - The dollar fell to a one-monthlow on Thursday, after the Federal Reserve signaled fewerinterest rate hikes over the next two years and expressedcaution about the U.S. economic outlook, lessening the appeal ofdollar-denominated assets.

Investors also expressed concern that policymakers may beraising interest rates just as the U.S. economy faces aslowdown.

Aside from lowering interest rate forecasts, the Fed alsoreduced growth and inflation expectations next year.

Sweden's currency, meanwhile, led gainers with the krona SEK= jumping 0.9 percent against the dollar on Thursday afterits central bank raised interest rates for the first time inmore than seven years.

In the United States, the two-year/10-year note yield curve- widely considered an indicator of future recessions -flattened to 10 basis points and just a shade above a 11-yearlow set earlier this month with an inversion widely consideredas a harbinger of recession.

"It appears that markets are perhaps now starting to focuson some of the more dovish aspects of the Fed's announcement,"said Nick Bennenbroek, currency strategist, at Wells FargoSecurities in New York.

"While the Swedish central bank's surprise rate hike, atleast in terms of timing, was a reminder that in addition toslower Fed tightening, next year may also see more active globalcentral bank tightening," he added.

In mid-morning trading, the dollar fell 0.6 percent .DXY against its rivals to 96.471, after earlier dropping to 96.258,its lowest in a month. On a daily basis, it is set for thebiggest percentage drop in six weeks.

Diminishing repatriation flows have also dampened thedollar's outlook. They peaked at nearly $300 billion in thefirst quarter of 2018 but shrank more than two-thirds to $93billion in the September quarter, according to latest U.S. data.


A rate hike by Sweden's Riksbank was not a consensus view inthe foreign exchange markets, with a Reuters poll showingtwo-thirds of analysts expecting the Riksbank to keep ratesunchanged. The remainder predicted a tightening.

In other currency pairs, the euro EUR= rose 0.6 percent to$1.1440 EUR= building on gains on Wednesday on news that Italyhad struck a deal with the European Commission over itscontested 2019 budget and some solid trade data this week.

The yen JPY= advanced against the dollar, which fell 0.8percent to 111.60. In a widely expected decision, the Bank ofJapan kept rates steady, maintaining its ultra-loose monetarysettings.

While the Fed raised interest rates by a quarter point,China's central bank rolled out a policy tool to spur lending tosmall and private companies in a move that some analysts termedas equivalent to a targeted rate cut.


Currency bid prices at 10:14AM (1514 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session Euro/Dollar EUR= $1.1440$1.1375 +0.57% -4.63% +1.1485 +1.1372 Dollar/Yen JPY= 111.5800 112.4700 -0.79% -0.96% +112.6000 +111.4800 Euro/Yen EURJPY= 127.67 127.95 -0.22% -5.56% +128.3700 +127.4700 Dollar/Swiss CHF= 0.9911 0.9944 -0.33% +1.72% +0.9954 +0.9866 Sterling/Dollar GBP= 1.2650 1.2607 +0.34% -6.38% +1.2706 +1.2610 Dollar/Canadian CAD= 1.3472 1.3483 -0.08% +7.12% +1.3504 +1.3446 Australian/Doll AUD= 0.7128 0.7107 +0.30% -8.63% +0.7148 +0.7087 ar Euro/Swiss EURCHF= 1.1339 1.1313 +0.23% -2.99% +1.1349 +1.1308 Euro/Sterling EURGBP= 0.9041 0.9019 +0.24% +1.79% +0.9050 +0.9008 NZ NZD= 0.6777 0.6763 +0.21% -4.36% +0.6790 +0.6726 Dollar/Dollar Dollar/Norway NOK= 8.6572 8.7174 -0.69% +5.49% +8.7300 +8.6113 Euro/Norway EURNOK= 9.9066 9.9219 -0.15% +0.59% +9.9481 +9.8810 Dollar/Sweden SEK= 8.9641 9.0951 -0.87% +9.30% +9.0997 +8.9269 Euro/Sweden EURSEK= 10.2575 10.3480 -0.87% +4.26% +10.3690 +10.2400

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting bySaikat Chatterjee in London) ((gertrude.chavez@thomsonreuters.com; 646-223-6322; ReutersMessaging: rm://gertrude.chavez.reuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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