FOREX-Dollar set for weekly loss as investors brace for slower Fed rises

Reuters

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    By Rae Wee
       SINGAPORE, Nov 25 (Reuters) - The U.S. dollar stood
close to a three-month low and was headed for a weekly loss on
Friday, as the prospect of the Federal Reserve slowing monetary
policy tightening as soon as December preoccupied investors and
kept the mood buoyant.
    Trading was thin overnight due to the Thanksgiving holiday
in the United States, though a softer dollar remained in focus. 
    Sterling  GBP=D3  rose more than 0.5% overnight and last
stood at $1.2103, close to its over three-month high of $1.2153
hit in the previous session and on track for a nearly 2% weekly
gain.
    The Aussie  AUD=D3  firmed to $0.6765 and was on track for a
weekly gain of more than 1%.
    The euro  EUR=EBS  gained 0.02% to $1.0413, edging toward an
over four-month high of $1.0481 hit last week.
    "We've still got the third successive day of positive risk
sentiment ... I think that is keeping the U.S. dollar subdued
pretty much across the board," said Ray Attrill, head of FX
strategy at National Australia Bank.
    Minutes from the Fed's November meeting released earlier
this week showed that a "substantial majority" of policymakers
agreed it would "likely soon be appropriate" to slow the pace of
interest rate rises - remarks that sent the greenback tumbling.
    The Fed's aggressive rate increases and market expectations
of how high the central bank could take them has been a huge
driver of the dollar's  =USD  10% surge this year.
    Against a basket of currencies, the U.S. dollar index  =USD 
stood at 105.83, testing its three-month trough of 105.30 hit
last week. It is down more than 1% for the week.
    Also aiding risk sentiment slightly was a survey that showed
that German business morale rose further than expected in
November.
    The Fed aside, accounts of the European Central Bank's
October meeting released overnight showed that policymakers fear
that inflation may be getting entrenched in the euro zone. While
the ECB firmly committed to further rate rises, markets are now
expecting a more modest, 50 basis point move at the December
meeting.  urn:newsml:reuters.com:*:nL8N32H1RX
    "We have the euro zone inflation numbers next week, so I
think they are going to be a big test of market pricing ... were
we to get another upside surprise on that, then I think that
would bring 75 bp back on the agenda," said Attrill.
    Elsewhere, the Japanese yen  JPY=EBS  was last at 138.635 to
the dollar, after rising some 0.7% overnight.
    Core consumer prices in Japan's capital rose at their
fastest annual pace in 40 years in November, exceeding the
central bank's 2% target for a sixth straight month, government
data showed.
    The New Zealand dollar  NZD=D3  slid 0.1% to $0.6257 but
remained close to its three-month peak hit in the previous
session.
    The kiwi was eyeing a weekly gain of more than 1.5%, aided
by the Reserve Bank of New Zealand's 75 bp rate increase this
week and its hawkish rate outlook.  urn:newsml:reuters.com:*:nL1N32I2JS urn:newsml:reuters.com:*:nL1N32J29J
    In China, markets were also closely watching for an expected
cut in banks' reserve requirement ratio (RRR).
    China will use timely cuts in banks' RRR, alongside other
monetary policy tools, to keep liquidity reasonably ample, state
media quoted a cabinet meeting as saying.
    "We believe it's likely the PBoC (People's Bank of China)
may cut RRR by 25 bp for most banks in the next couple of weeks
(or even days)," said analysts at Nomura.
    "That being said, the RRR is likely to only have a limited
positive impact, as we believe the real hurdle for the economy
lies in local officials' more zealous implementation of COVID
restrictions rather than insufficient loanable funds."
    The offshore Chinese yuan  CNH=D3  was last at 7.1625 to the
dollar and was headed for a weekly loss, as COVID worries
continue to weigh.
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World FX rates    https://tmsnrt.rs/2RBWI5E
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 (Reporting by Rae Wee; Editing by Ana Nicolaci da Costa, Robert
Birsel)
 ((Rae.Wee@thomsonreuters.com;))

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