US dollar falls as rally pauses; riskier currencies rebound

London

THE US dollar edged down against major peers on Thursday (Oct 14), reaching its lowest level in 10 days in a pullback from its recent rally, while the Australian and New Zealand dollars rose.

Expectations that the US Federal Reserve would tighten monetary policy more quickly than previously expected have helped the dollar rise since early September. But its ascent has recently eased and on Thursday (Oct 14) it was on track for its second biggest two-day drop so far this year, even after minutes of the Fed's September meeting confirmed tapering of stimulus is likely to start this year.

At 0913 GMT, the dollar index was down 0.2 per cent on the day at 93.794, its lowest since Oct 4. On Oct 12, it had reached a one-year high at 94.563. The euro was up 0.2 per cent at US$1.1619, a nine-day high.

A Labor Department report showed US consumer prices rose solidly in September, and they are likely to rise further amid a surge in energy prices, potentially pressuring the Fed to act sooner to normalise policy. The Fed's September meeting minutes also showed that a growing number of policymakers were worried that high inflation could persist.

US initial jobless claims and producer price index data are due later in the day.

Swedish inflation picked up to its highest level since 2008 in September, prompting the Swedish krona to extend gains and reach its highest in eight months versus the euro. At 0914 GMT, the euro was down 0.5 per cent against the Swedish krona at 10.0175. The Norwegian krone also strengthened, with the euro down 0.6 per cent against the Nokkie at 9.7828.

The Australian dollar, which is seen as a liquid proxy for risk appetite, was up 0.5 per cent versus the dollar at US$0.74175. The currency brushed off data showing a drop in jobs numbers, with investors betting on a quick recovery since lockdown measures have eased. The New Zealand dollar also rose, up 0.8 per cent at US$0.70245, its highest in two-and-a-half weeks.

The Swiss franc was up around 0.2 per cent against the euro. Around 0600 GMT, it reached its highest in 11 months versus the euro. Turkey's lira pared losses, pulling back from the record low it touched overnight after President Tayyip Erdogan dismissed three members of the central bank's monetary policy committee.

Elsewhere, the cryptocurrency Bitcoin was at around US$57,622. Earlier in the session it hit a five-month high of US$58,550. REUTERS