Dollar's five-week winning streak ends as risk sentiment rebounds



* Yen at lowest levels since October 2018

* U.S. retail sales surprise to the upside, fueling risk-on sentiment

* Bitcoin hits $60,000 as traders eye first U.S. ETFs

* Graphic: World FX rates Link

By John McCrank

NEW YORK, Oct 15 (Reuters) - The dollar edged lower against a basket of major currencies on Friday, on track to end its five-week winning streak, as global risk appetite rebounded, helping reduce demand for the safe-haven currency.

Global stock markets have rallied this week as fears about a stagflationary economy have been eased by forecast-beating corporate earnings in the United States.

Unexpectedly strong U.S. retail sales data for September also boosted sentiment. Retail sales rose 0.7% last month, versus expectations of a 0.2% decline, helped in part by higher prices.

"The risk appetite here remains really, really strong for the time being," said Boris Schlossberg, managing director of FX strategy at BK Asset Management.

"That's helping the high beta currencies like the pound, the euro and the Aussie, simply because the market is feeling much more positive," he said.

The dollar index =USD initially firmed after the retail sales data, but then trended lower and was last down 0.106% at 93.941. The greenback was down 0.19% for the week, after having appreciated for the previous five weeks, and hitting a one-year high of 94.563 on Tuesday.

The big run-up in dollar strength, based on expectations that the U.S. Federal Reserve may begin hiking rates sooner than had been anticipated, may have been overblown, and the dollar is now consolidating, said Marc Chandler, chief market strategist at Bannockburn Global Forex.

"Next week will help clarify whether we are consolidating, and whether the consolidation is just like a breath that refreshes or is a prelude for a correction," he said.

The greenback had rallied against its major peers since early September on expectations the U.S. central bank would tighten monetary policy more quickly than previously expected amid an improving economy and surging energy prices.

Minutes of the Fed's September meeting confirmed this week that a tapering of stimulus is all but certain to start this year, although policymakers are sharply divided over inflation and what they should do about it.

Money markets are currently pricing in about 50/50 odds of a 25 basis point rate hike by July. FEDWATCH

Sterling GBP=D3 rose 0.57% to $1.3765, hitting its highest since Sept. 17, while the euro EUR=EBS edged down 0.03% to $1.1595 after touching $1.1624 on Thursday for the first time since Sept. 4.

The risk-sensitive Aussie dollar AUD=D3 added 0.02% to $0.7417, having climbed to $0.7439 earlier in the session. New Zealand's dollar NZD=D3 jumped 0.54% to $0.7068, extending Thursday's 1% surge.

The Japanese yen was the biggest loser, dropping to as low as 114.46 yen per dollar JPY=EBS , its weakest since October 2018. The yen is a safe-haven currency and has been knocked by the rebound in risk sentiment including in Asia. The dollar was last up 0.53% against the yen at 114.28 yen.

In cryptocurrency markets, the price of bitcoin topped $60,000 for the first time in six months and was not far from its record high on bets U.S. regulators will approve a bitcoin futures exchange traded fund.



World FX rates Link
Dollar vs yen Link



Reporting by John McCrank in New York; Editing by Edmund
Blair, Andrea Ricci and Diane Craft

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.