CURRENCIES: Dollar Takes Dive After Fed's Clarida Strikes Dovish Tone
17 November 2018 - 7:42AM
Dow Jones News
By Anneken Tappe, MarketWatch
British pound bounces after worst day in more than 2 years
The U.S. dollar sold off versus its major rivals Friday in New
York after Federal Reserve Vice Chairman Richard Clarida offered
some dovish comments. The ailing buck gave more room to rebound to
the British pound, which recovered from its worst one-day
performance in more than two years on Thursday.
Clarida in an interview with CNBC
(http://www.marketwatch.com/story/feds-no2-clairida-says-there-are-signs-global-growth-is-slowing-but-doesnt-think-rate-hikes-are-too-rapid-2018-11-16)
offered a more dovish view on the Fed's path to monetary policy
normalization, but said that central bank's pace of rate hikes
wasn't too fast. Clarida also said the global economy showed signs
of slowing.
The U.S. dollar weakened following the comments, with the ICE
U.S. Dollar Index dipping 0.5% to 96.478. The gauge is on track for
a 0.4% decline for the week, according to FactSet.
The dollar gauge was largely unaffected by trade-related
comments from President Donald Trump, who said the U.S. may not
have to impose further tariffs on China and that he didn't want to
put "China in a bad position."
Meanwhile, the "anti-dollars", the British pound and the euro,
benefited from the buck's weakness.
Sterling bounced back from the sharp loss incurred Thursday on
the back of further government resignations over Brexit. Sterling,
which logged its worst performance since October 2016 on Thursday,
according to Dow Jones Data Group, was at $1.2830, up from
$1.2774.
Prime Minister Theresa May got a new Brexit secretary to join
her cabinet on Friday, with Steve Barclay stepping up to the
challenge after Dominic Raab stepped down on Thursday.
Check out:These are the latest resignations from the U.K.
government that rattled investors
(http://www.marketwatch.com/story/these-are-the-latest-resignations-from-the-uk-government-that-rattled-investors-2018-11-15)
But the outlook remains uncertain after multiple calls for a
vote of no confidence in Prime Minister Theresa May were made
Thursday. Investors are also concerned about the likelihood of May
getting an agreement with Brussels through parliament in next
month's Brexit bill vote. In case of a "no" vote, the options would
be a "no-deal" Brexit, new elections or a second referendum.
Don't miss:Brexit turmoil: Here's what's at stake if U.K.'s May
faces a leadership challenge
(http://www.marketwatch.com/story/brexit-turmoil-heres-whats-at-stake-if-uks-may-faces-a-leadership-challenge-2018-11-16)
Read:Here's how much Brexit turmoil might whack the British
pound, analysts predict
(http://www.marketwatch.com/story/heres-how-much-brexit-turmoil-might-whack-the-british-pound-analysts-predict-2018-11-15)
In continental Europe, the euro last bought $1.1411, slightly up
from $1.1332 late Thursday in New York.
Versus the pound, the shared eurozone currency was up 0.3% at
GBP0.8893
Harmonized eurozone inflation increased 2.2%, in line with
expectations, year-over-year in October, while core inflation stood
at 1.1% over the same period. European Central Bank President Mario
Draghi said in a speech earlier that eurozone inflation could be
negatively affected by businesses dealing with uncertainties. The
ECB is expected to begin raising interest rates, for which rising
inflation is a key condition, around summer next year.
Speaking of interest rates, Mexico's central bank upped its key
rate by 25 basis points to 8% Thursday, in line with consensus
expectations. Mexico's peso is a popular emerging market currency,
in part due to its high local interest rates. One dollar last
bought 20.1224 pesos, versus 20.2293 pesos late Thursday.
(END) Dow Jones Newswires
November 16, 2018 15:27 ET (20:27 GMT)
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