FOREX-Dollar dips as risk sentiment improves, bitcoin hits record high - Reuters

 (Adds detail, updates prices; changes byline; previous LONDON)
    * Graphic: World FX rates tmsnrt.rs/2RBWI5E

    By Karen Brettell
    NEW YORK, Oct 20  (Reuters) - The dollar dipped on Wednesday
as risk sentiment improved and as investors focused on rising
commodity prices and when global central banks are likely to
begin hiking interest rates to fend off persistently high
inflation.
    The greenback hit a one-year high against a basket of other
currencies last week as market participants ramped up bets that
the Federal Reserve will raise rates sooner than expected to
quell rising price pressures.
    Those bets have faded, however, while investors are pricing
for even more aggressive rate increases in other countries and
as commodity-linked currencies including the Canadian and
Australian dollars outperform.
    “When it comes to central banks, there’s a lot of aggressive
pricing out there,” said Bipan Rai, North American head of FX
strategy at CIBC Capital Markets in Toronto, noting that the
market is likely overstating how fast rate hikes will come.
    The dollar index was last down 0.09% at 93.71.
    Rai expects the dollar may outperform if investors pare back
rate hike expectations in other countries, though “that’s
something that’s going to take some time to correct.”
    “When push comes to shove, given the underlying fundamentals
in the United States, which are still very constructive for
growth, we think the Fed is probably going to be the central
bank that raises rates over the course of the coming years at a
bit of a more aggressive clip than the market is pricing in
now,” Rai said.
    Market participants are pricing for the Fed to raise rates
twice by the end of 2022.
    ING FX strategists said in a client note the dollar's recent
decline could be due to a combination of markets closing
long-dollar positions and "a benign risk environment, where a
strong U.S. earnings season has continued to offset
inflation/monetary tightening concerns."
    "At this stage, it looks like the dollar is lacking some
catalysts to contain the ongoing correction, and any support to
the greenback may need to come from a cool-off in the recent
risk-on mood in markets," ING said.
    The Australian dollar, seen as a liquid proxy for
risk appetite, gained 0.27% on the day to $0.7496, having hit
its highest since July overnight.
    The New Zealand dollar rose 0.41% to $0.7154, the
highest since June.
    Reduced demand for safe-haven assets saw the dollar hit a
four-year high of 114.67 versus the yen overnight,
before retracing to 114.26.
    The Canadian dollar was higher on the day after the
country’s annual inflation rate accelerated to an 18-year high
in September, putting the focus on the Bank of Canada ahead of a
rate decision next week.
    The greenback was last down 0.07% against the loonie
 at CAD$1.2352.
    The British pound was down 0.05% at $1.3781 after
data showed that British inflation slowed unexpectedly last
month. The figures did little to change expectations that the
Bank of England will become the world's first major central bank
to raise rates.
    In cryptocurrencies, bitcoin hit a record high of
$66,074, a day after the first U.S. bitcoin futures-based
exchange-traded fund began trading.
    
    ========================================================
    Currency bid prices at 9:46 AM (1346 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change                   
                                              Session                                             
 Dollar index                 93.7100        93.8060     -0.09%         4.144%        +93.8800    +93.6760
 Euro/Dollar                  $1.1640        $1.1632     +0.07%         -4.73%        +$1.1653    +$1.1617
 Dollar/Yen                   114.2550       114.4000    -0.12%         +10.63%       +114.6950   +114.1450
 Euro/Yen                     132.98         133.06      -0.06%         +4.79%        +133.4800   +132.7500
 Dollar/Swiss                 0.9211         0.9230      -0.21%         +4.11%        +0.9252     +0.9207
 Sterling/Dollar              $1.3781        $1.3790     -0.05%         +0.88%        +$1.3814    +$1.3743
 Dollar/Canadian              1.2352         1.2363      -0.07%         -2.98%        +1.2367     +1.2335
 Aussie/Dollar                $0.7496        $0.7477     +0.27%         -2.55%        +$0.7504    +$0.7465
 Euro/Swiss                   1.0720         1.0733      -0.12%         -0.81%        +1.0765     +1.0721
 Euro/Sterling                0.8444         0.8431      +0.15%         -5.53%        +0.8460     +0.8430
 NZ                           $0.7182        $0.7154     +0.41%         +0.03%        +$0.7183    +$0.7147
 Dollar/Dollar                                                                                    
 Dollar/Norway                8.3830         8.3525      +0.29%         -2.45%        +8.4120     +8.3575
 Euro/Norway                  9.7592         9.7187      +0.42%         -6.76%        +9.7789     +9.7071
 Dollar/Sweden                8.6088         8.6203      -0.08%         +5.03%        +8.6361     +8.6026
 Euro/Sweden                  10.0217        10.0295     -0.08%         -0.54%        +10.0456    +10.0100
 


    
 (Reporting by Karen Brettell; Additional reporting by Elizabeth
Howcroft in London; Editing by Steve Orlofsky)
  

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2021-10-20 14:23:00Z
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