FOREX-Dollar snaps three-day losing streak as selling pressure abates

Reuters

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    * Dollar index up 0.3%
    * U.S. retail sales plunge in December

 (Updates to U.S. afternoon)
    By Saqib Iqbal Ahmed
    NEW YORK, Jan 14 (Reuters) - The U.S. dollar snapped a
three-day losing streak on Friday as the recent selling spree
driven by the view that Federal Reserve tightening moves were
largely priced in abated, and as weaker risk appetite in
financial markets led investors to shun  riskier currencies.
    The U.S. dollar index  =USD  was 0.3% higher at 95.157, but
still looked set to finish the week down about 0.6%, its worst
weekly showing since early September.
    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 foreign exchange 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 dropped by the most in 10 months in
December, likely the result of Americans starting their holiday
shopping in October to avoid empty shelves at stores.  
 urn:newsml:reuters.com:*:nL1N2TU18H
    On Friday, the dollar struggled to advance against the
Japanese yen  JPY=EBS , with the U.S. currency falling 0.02% to
more than a three-week low of 114.15 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 0.99% to a two-day low.
    Sterling was 0.22% 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
    Cryptocurrencies struggled to make a meaningful rebound
after sharp losses at the start of the week. Bitcoin  BTC=BTSP 
was up about 1% on the day at $43,086.34, not far from the
five-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 and Paul Simao)
 ((saqib.ahmed@thomsonreuters.com; @SaqibReports; +1 646 223
6054; Reuters Messaging:
saqib.ahmed.thomsonreuters.com@reuters.net))

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