FOREX-Dollar pares losses as Powell signals bond taper

Reuters

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 (Recasts with comments from Fed's Powell, adds data, Bitcoin
price, updates prices)
    * Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

    By Karen Brettell
    NEW YORK, Oct 22  (Reuters) - The dollar pared losses on
Friday after Federal Reserve Chairman Jerome Powell said the
U.S. central bank should begin reducing its asset purchases
soon, but should not yet raise interest rates.
    Powell said employment is still too low and high inflation
will likely abate next year as pressures from the COVID-19
pandemic fade, even as many market participants are concerned
that rising price pressures will last longer than policymakers
believe.  urn:newsml:reuters.com:*:nL1N2RI1MV
    Investors have taken profits since the dollar index hit a
one-year high last week, when concerns that inflation will
remain stubbornly high for longer led investors to bring forward
expectations on when the Fed will first raise rates to mid-2022.
    Now, “there’s a bit of a positioning unwind taking place,
we’ve obviously seen a firmer dollar since the September Fed,”
said Mazen Issa, senior foreign exchange strategist at TD
Securities in New York. “That also dovetails with the seasonal
tendency for the dollar to soften into the end of the month.”
    The Fed said at its September meeting that it will likely
begin reducing its monthly bond purchases as soon as November,
and signaled interest rate increases may follow more quickly
than expected.  urn:newsml:reuters.com:*:nL1N2QN1LU
    The dollar index  =USD  fell 0.10% to 93.64, and is down
from a one-year high of 94.56 last week. The euro  EUR=EBS 
gained 0.09% to $1.1636.
    Data on Friday showed that U.S. business activity increased
solidly in October, suggesting economic growth picked up at the
start of the fourth quarter as COVID-19 infections subsided,
though labor and raw material shortages held back manufacturing.
 urn:newsml:reuters.com:*:nZON0045QJ
    The dollar rally has also faded as investors build in
expectations for sooner rate increases in other currencies.
    Issa expects the dollar to regain traction, however, as
global central banks push back against the aggressive repricing
of rate hikes, while the Fed is likely to remain relatively
hawkish and move forward with a reduction in its bond purchase
program.
    “Once we get the pushback from other central banks and the
Fed’s committed to taper, we should see dollar dips really being
shallow,” Issa said.
    The Aussie dollar  AUD=D3 , which is a proxy for risk
appetite, gave up earlier gains and was last down 0.05% at
$0.7462.
    The safe-haven yen gained, though it remains the weakest
performer, having dropped by almost 10% this year. The dollar
was last down 0.50% against the Japanese currency  JPY=D3  at
113.42 yen. 
    Bitcoin  BTC=BTSP  dropped 2.98 percent to $60,367. The
cryptocurrency set a record high of $67,017 on Wednesday, after
the launch of the first exchange-traded fund that buys U.S.
bitcoin futures.
    
    ========================================================
    Currency bid prices at 3:03PM (1903 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change                   
                                              Session                                             
 Dollar index      =USD       93.6380        93.7410     -0.10%         4.064%        +93.7890    +93.5340
 Euro/Dollar       EUR=EBS    $1.1636        $1.1625     +0.09%         -4.76%        +$1.1656    +$1.1621
 Dollar/Yen        JPY=D3     113.4200       114.0200    -0.50%         +9.84%        +114.2000   +113.4400
 Euro/Yen          EURJPY=    131.97         132.50      -0.40%         +3.98%        +132.7900   +131.9300
 Dollar/Swiss      CHF=EBS    0.9162         0.9184      -0.24%         +3.56%        +0.9185     +0.9152
 Sterling/Dollar   GBP=D3     $1.3754        $1.3792     -0.27%         +0.68%        +$1.3815    +$1.3736
 Dollar/Canadian   CAD=D3     1.2370         1.2371      +0.00%         -2.85%        +1.2390     +1.2321
 Aussie/Dollar     AUD=D3     $0.7462        $0.7466     -0.05%         -2.99%        +$0.7512    +$0.7454
 Euro/Swiss        EURCHF=    1.0660         1.0673      -0.12%         -1.36%        +1.0682     +1.0659
 Euro/Sterling     EURGBP=    0.8458         0.8423      +0.42%         -5.36%        +0.8468     +0.8422
 NZ                NZD=D3     $0.7142        $0.7157     -0.17%         -0.51%        +$0.7188    +$0.7133
 Dollar/Dollar                                                                                    
 Dollar/Norway     NOK=D3     8.3595         8.3690      -0.14%         -2.68%        +8.3790     +8.3235
 Euro/Norway       EURNOK=    9.7295         9.7145      +0.15%         -7.05%        +9.7452     +9.6890
 Dollar/Sweden     SEK=       8.5751         8.6029      -0.19%         +4.62%        +8.6145     +8.5615
 Euro/Sweden       EURSEK=    9.9781         9.9973      -0.19%         -0.98%        +10.0050    +9.9712
 
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World FX rates    https://tmsnrt.rs/2RBWI5E
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 (Reporting by Karen Brettell; Editing by Susan Fenton and
Jonathan Oatis)
 ((karen.brettell@thomsonreuters.com))

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