FOREX-Dollar reverses earlier gains as equities show resilience

Reuters

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    * Dollar falls as stocks rebound from CPI news 
    * U.S. core CPI posts largest gain in a year 
    * Retail sales post largest decline in 11 months 
 
 (Updates news, table, quotes and prices) 
    By Kate Duguid 
    NEW YORK, Feb 14 (Reuters) - The U.S. dollar fell on 
Wednesday, as equity markets rebounded quickly following a 
stronger-than-expected inflation data report. 
    The announcement that the U.S. core Consumer Price Index 
posted its biggest gain in a year raised expectations that price 
pressures may accelerate, prompting a faster pace of interest 
rate increases from the Federal Reserve. The possibility that 
the Fed would clamp down on inflation initially drove up the 
dollar index  .DXY .  urn:newsml:reuters.com:*:nLNSEDEE79 
    But the dollar quickly fell to a session low of 89.231 
against a basket of currencies, as the equity market recovered 
from earlier losses and Treasury bond yields remained 
range-bound.   
    The riskoff trade - that is, the sale of riskier currencies 
in emerging markets and the Australian and Canadian dollars in 
favor of safer havens - that investors put on immediately after 
the CPI release "have come bouncing back, helped by equity 
resilience," said Alan Ruskin, global head of currency strategy 
at Deutsche Bank in New York.  
    After opening lower at the bell, the S&P 500  .SPX  rose to 
2,686.9, its highest since Feb. 8. The Dow Jones Industrial 
Average  .DJI  followed the same trend, opening lower before 
rising to 0.5 percent above its last close. 
    The dollar's limited rise may have also been related to a 
surprise decline in U.S. retail sales in January.  urn:newsml:reuters.com:*:nLNSEDEE78 
    "Retail sales truly disappointed," said Juan Perez, senior 
FX trader and strategist at Tempus, Inc in Washington. "They 
kept the dollar from blowing up after stellar CPI. People need 
to be buying things in order for the economy to grow and it 
seems like we're lacking on that."  
    As the market digested the data, initial perceptions of the 
importance of the CPI print may have waned. "With an expected 
slowdown in PCE (personal consumption expenditures) in January, 
I think that's probably going to mix some of the sentiment at 
the Fed," said Lennon Sweeting, chief market strategist at XE 
Money Transfers in Toronto. 
    As the dollar weakened, both sterling and the euro 
recovered. At 12:47 p.m. EST (1747 GMT) the British pound  GBP=  
was at $1.398, up 0.65 percent from Tuesday's close. 
    The single currency  EUR=  was at $1.242, up nearly half a 
percent from its last close, supported also by 
stronger-than-expected euro zone industrial production data for 
December.   
    The yen rose to a 15-month high against the dollar at 106.70 
 JPY=  earlier in the day. The Japanese currency was last at 
107.03.  
    "The fact that the yen has still hung in there, and is still 
stronger vis-à-vis the dollar suggests that in this instance the 
tail isn't going to wag the dog," said Ruskin. "In other words, 
the squeeze that you've had on yen crosses from things like the 
Aussie dollar are not being translated into (the dollar/yen) ... 
the dollar/yen could have gone higher in that environment." 
     
    ======================================================== 
    Currency bid prices at 12:59PM (1759 GMT) 
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid 
                                              Previous                   Change                  
                                              Session                                            
 Euro/Dollar      EUR=        $1.2415        $1.2350     +0.53%         +3.49%      +1.2420     +1.2277 
 Dollar/Yen       JPY=        107.0500       107.8200    -0.71%         -4.99%      +107.8900   +106.7300 
 Euro/Yen         EURJPY=     132.94         133.17      -0.17%         -1.66%      +133.3500   +131.6200 
 Dollar/Swiss     CHF=        0.9302         0.9346      -0.47%         -4.53%      +0.9374     +0.9300 
 Sterling/Dollar  GBP=        1.3976         1.3890      +0.62%         +3.43%      +1.3983     +1.3802 
 Dollar/Canadian  CAD=        1.2551         1.2591      -0.32%         -0.21%      +1.2648     +1.2534 
 Australian/Doll  AUD=        0.7895         0.7859      +0.46%         +1.21%      +0.7896     +0.7774 
 ar                                                                                              
 Euro/Swiss       EURCHF=     1.1550         1.1547      +0.03%         -1.19%      +1.1561     +1.1499 
 Euro/Sterling    EURGBP=     0.8882         0.8889      -0.08%         -0.01%      +0.8919     +0.8875 
 NZ               NZD=        0.7343         0.7272      +0.98%         +3.63%      +0.7351     +0.7243 
 Dollar/Dollar                                                                                   
 Dollar/Norway    NOK=        7.8294         7.8702      -0.52%         -4.60%      +7.9515     +7.8292 
 Euro/Norway      EURNOK=     9.7211         9.7248      -0.04%         -1.29%      +9.7663     +9.7009 
 Dollar/Sweden    SEK=        7.9908         8.0261      +0.09%         -2.57%      +8.1055     +7.9877 
 Euro/Sweden      EURSEK=     9.9237         9.9152      +0.09%         +0.86%      +9.9649     +9.8767 
  
     
 
     
     
     
 
 (Reporting by Kate Duguid; Editing by Andrew Hay and Rosalba 
O'Brien) 
 ((kate.duguid@thomsonreuters.com; +646-223-6118; Reuters 
Messaging: kate.duguid@thomsonreuters.com@thomsonreuters.net)) 
 
Keywords: GLOBAL FOREX/  
     

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