FOREX-Dollar edges higher as selling pressure abates

Reuters

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    * Dollar index up 0.1%
    * U.S. retail sales plunge in December

 (Updates prices, market activity, comments to U.S. market open;
changes dateline, previous LONDON)
    By Saqib Iqbal Ahmed
    NEW YORK, Jan 14 (Reuters) - The U.S. dollar was on track to
snap a 3-day losing streak on Friday as a selling spree driven
by the view that Federal Reserve tightening moves were largely
priced-in appeared to abate. 
    The U.S. dollar index  =USD  was 0.1% higher at 94.931, but
still looked set to finish the week down about 0.9%, its worst
weekly showing in eight months.
    The greenback, which rose more than 6% against a basket of
currencies in 2021, came under pressure this week despite Fed
Chair Jerome Powell saying that the U.S. economy is ready for
the start of tighter monetary policy and data showing the
largest annual rise in inflation in nearly four decades.
 urn:newsml:reuters.com:*:nL1N2TR1FJ  urn:newsml:reuters.com:*:nL1N2TS143
    "Investors appear to be taking the view that the USD has
peaked and that Fed tightening moves are priced in and the likes
of the euro offer better potential returns down the road,"
Scotiabank FX strategists, said in a note.
    "We do not concur but have to acknowledge that the USD has
suffered a setback — psychologically, at least — by breaking
with supportive yield spreads versus its peers and by breaking
below the base of its recent consolidation range," they said.
    Hedge fund dollar positioning close to the highest levels
since early 2020 has added to the selling pressure on the dollar
this week, analysts said.
    U.S. retail sales tumbled in December as Americans struggled
with shortages of goods and an explosion of COVID-19 infections,
but that will likely not change expectations that economic
growth accelerated in the fourth quarter.  urn:newsml:reuters.com:*:nL1N2TT2FW
    On Friday, the dollar remained weak versus the Japanese yen
 JPY=EBS , with the U.S. currency falling 0.4% to a more than
3-week low of 113.71 yen.
    The safe-haven Japanese currency has benefited from the
recent souring of risk sentiment in global financial markets. 
    Bank of Japan policymakers are debating how soon they can
start telegraphing an eventual interest rate hike, which could
come even before inflation hits the bank's 2% target, Reuters
reported on Friday.  urn:newsml:reuters.com:*:nL4N2TT0WB
    With global stock markets under pressure on Friday and
Treasury yields higher, the Australian dollar  AUD= , seen as a
liquid proxy for risk appetite, fell 0.52% to a 2-day low.
    Sterling was 0.09% lower against the dollar as investors
assessed the impact of a potential leadership change in the
country as Prime Minister Boris Johnson faces the gravest crisis
of his premiership after revelations about a series of
gatherings in Downing Street during COVID-19 lockdowns.
 urn:newsml:reuters.com:*:nL1N2TU0O0
    Crytocurrencies struggled to make a meaningful rebound after
sharp losses at the start of the week. Bitcoin  BTC=BTSP  was
about flat on the day at $42,774.98, not far from the 5-month
low of $39,558.70 touched on Monday.

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World FX rates    https://tmsnrt.rs/2RBWI5E
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 (Reporting by Saqib Iqbal Ahmed; Editing by Emelia
Sithole-Matarise)
 ((saqib.ahmed@thomsonreuters.com; @SaqibReports; +1 646 223
6054; Reuters Messaging:
saqib.ahmed.thomsonreuters.com@reuters.net))

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