FOREX-Dollar gains, but outlook suggests weak trend

Reuters

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    * Euro reverses gains vs dollar
    * U.S. CPI falls in  December
    * Chinese yuan at 6-month high 
    * Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh

 (Adds analyst comment, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Jan 11 (Reuters) - The dollar rose against the
euro on Friday, boosted by technical factors after the single
currency hit key resistance levels, even as the greenback's
outlook remained bleak amid cautious signals from the Federal
Reserve about further rate hikes.
    "It seems like we're getting some model and stop-loss buying
on the dollar after the euro hit resistance on the upside," said
John Doyle, vice president of dealing and trading at Tempus Inc
in Washington.
    "The sharpest move was in euro/dollar and it has become this
across-the-board buying of the dollar," he added.
    That said, investors remained wary of pushing the dollar a
lot higher.
    This week's Fed minutes, which underscored the U.S. central
bank's flexibility on monetary policy, triggered dollar selling
that lifted the euro as high as $1.1581 and propelled it past a
100-day moving average for the first time in three months.
    Greg Anderson, global head of FX strategy at BMO Capital
Markets in New York, said the Fed's rate outlook was just one
factor for the dollar's weakness so far in January.
    The Fed chairman said on Thursday in a forum at the Economic
Club of Washington that the U.S. central bank intends to shrink
its balance sheet further, suggesting it is not done tightening
monetary policy just yet.
    Markets, however, are pricing in no further rate hikes by
the Fed this year.
    Data showing U.S. consumer prices in December fell for the
first time in nine months in December had little impact on the
market, but it backed the Fed's cautious stance about raising
rates this year.  urn:newsml:reuters.com:*:nL1N1ZA1QK
    Aside from the Fed's dovish rate outlook, Shaun Osborne,
chief FX strategist, at Scotiabank in Toronto, cited cyclical,
structural and secular trends, which could also pressure the
dollar in 2019.
    "The outlook for relative central bank policy has reached
its climax in terms of offering the U.S. dollar support, and
widening fiscal and current account deficits are expected to
deliver medium-term weakness in the currency," Osborne said.
    In afternoon trading, the dollar index rose 0.1 percent to
95.660  .DXY , but posted its fourth straight weekly decline.   
    The euro fell 0.3 percent to $1.1465  EUR= .
    The dollar was also slightly higher versus the yen at 108.48
 yen  JPY= , and up versus the Canadian dollar, which fell 0.3
percent  CAD= . The greenback last traded at C$1.3272.
    In other trading, the Chinese yuan  CNY=CFXS  rose to its
highest level since late July against the dollar, as China and
the United States extended trade talks in Beijing. China also
gave recent assurances of further fiscal boosts to its slowing
economy, lifting the yuan as well.
    
    ========================================================
    Currency bid prices at 3:04PM (2004 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1464        $1.1498     -0.30%         -0.04%      +1.1540     +1.1458
 Dollar/Yen       JPY=        108.4900       108.4200    +0.06%         -1.61%      +108.5900   +108.1500
 Euro/Yen         EURJPY=     124.38         124.68      -0.24%         -1.46%      +124.9900   +124.2400
 Dollar/Swiss     CHF=        0.9841         0.9842      -0.01%         +0.28%      +0.9856     +0.9815
 Sterling/Dollar  GBP=        1.2843         1.2747      +0.75%         +0.67%      +1.2865     +1.2711
 Dollar/Canadian  CAD=        1.3273         1.3234      +0.29%         -2.67%      +1.3274     +1.3183
 Australian/Doll  AUD=        0.7204         0.7185      +0.26%         +2.20%      +0.7235     +0.7183
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1283         1.1320      -0.33%         +0.26%      +1.1340     +1.1273
 Euro/Sterling    EURGBP=     0.8923         0.9015      -1.02%         -0.68%      +0.9061     +0.8925
 NZ               NZD=        0.6831         0.6778      +0.78%         +1.70%      +0.6843     +0.6781
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        8.5322         8.4777      +0.64%         -1.23%      +8.5390     +8.4447
 Euro/Norway      EURNOK=     9.7832         9.7497      +0.34%         -1.24%      +9.7893     +9.7367
 Dollar/Sweden    SEK=        8.9322         8.9035      -0.02%         -0.35%      +8.9441     +8.8600
 Euro/Sweden      EURSEK=     10.2400        10.2420     -0.02%         -0.23%      +10.2560    +10.2090
 
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Dan Grebler
and Richard Chang)
 ((gertrude.chavez@thomsonreuters.com; 646-223-6322; Reuters
Messaging: rm://gertrude.chavez.reuters.com@reuters.net))

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