FOREX-Dollar recovers from two-week lows in holiday-thinned market
(Updates prices, adds Swedish crown move)
* Dollar index up quarter of a percent
* Trade thinned by New Year holiday
* Focus on non-farm payrolls later in week
* Istanbul attack has limited market impact
* Graphic: World FX rates in 2016
http://tmsnrt.rs/2egbfVh
By Jemima Kelly
LONDON, Jan 2 (Reuters) - The dollar recovered from a
two-week low against a basket of six major currencies on Monday,
though trade was thin with many markets closed for the New Year
holiday.
The greenback had soared to 14-year highs in December,
boosted by market expectations that the U.S. Federal Reserve
will hike rates as many as three times this year, and that
President-elect Donald Trump will stoke growth and inflation
with a programme of fiscal expansion.
The dollar finished the year with an almost 4 percent annual
rise, the fourth consecutive year of gains
But the index that measures the currency against six major
rivals lost more than 1 percent during the last three days of
last week <.DXY>, its weakness exacerbated on Friday during a
flash surge for the euro in low volumes of trading in Asia.
The single currency jumped two full cents to as high as
$1.07, before quickly retreating, prompting analysts to draw
parallels with a "flash crash" in October that briefly knocked
almost 10 percent off the value of Britain's pound.
On Monday the euro fell 0.4 percent to $1.0513 <EUR=>
despite strong manufacturing data for the currency bloc, while
the dollar index climbed half a percent to 102.68, close to the
14-year peak of 103.65 it touched on Dec. 30. [nU8N1D301D]
"In the last days of 2016 we saw the dollar retreat
somewhat, and there might be some sense of a correction from
Europe this morning. I don't see any fundamental drivers for the
moves," said Commerzbank currency strategist Esther Reichelt in
Frankfurt.
Data released on Friday showed speculators once again taking
a bullish stance on the dollar, increasing their bets in the
week up to last Tuesday after cutting their long positions for
the first time since October in the previous week. [IMM/FX]
The Swedish crown rose half a percent to a 3-1/2-month high
of 9.5285 crowns per euro <EURSEK=> after the purchasing
managers' index for the manufacturing sector rose to 60.1 points
in December, up from 57.3 the previous month. [nEONGCU0SE]
The main data focus for the week will be Friday's U.S.
non-farm payrolls report.
"This week's NFP figure is likely to confirm (the)
assumption ... that if the FOMC (Federal Open Market Committee)
hopes to get at least two hikes in during the year, one of them
should be out of the way by the middle of the year," wrote
FXPrimus's head of investment research, Marshall Gittler.
A gun attack in Istanbul that killed 39 people was seen
having little impact on the currency market, with the Japanese
yen - traditionally used as a safe haven - falling against the
dollar <JPY=> and the Turkish lira slipping only 0.4 percent
<TRY=>.
"The market is unfortunately getting increasingly used to
such events - it barely reacts to them anymore," said
Commerzbank's Reichelt. "When we had that attack in Berlin
recently, there was barely any move - the euro moved a few pips.
Sterling edged down 0.2 percent to $1.2299 <GBP=D4>.
For Reuters new Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Editing by John Stonestreet and Richard Lough)
((jemima.kelly@thomsonreuters.com; +44 20 7542 7508; Reuters
Messaging:
jemima.kelly.thomsonreuters@reuters.net))
Keywords: GLOBAL FOREX/
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