May 1, 2018 / 6:46 PM / 3 months ago

CORRECTED-FOREX-Dollar jumps before Fed statement, turns positive for 2018

 (Corrects dollar-euro rate in fourth paragraph to $1.1998 )
    * Dollar positive on year on growth outlook
    * Fed meeting statement on Wednesday watched for June hike
clues
    * Sterling slips on weak manufacturing data

    By Karen Brettell
    NEW YORK, May 1 (Reuters) - The U.S. dollar surged into
positive territory for 2018 on Tuesday and broke past key levels
against several currencies as a divergence between growth and
the interest rate outlook versus other countries spurred
investors to chase the currency higher.
    The dollar, traded against a basket of major currencies,
rose as high as 92.566, the highest since Jan. 10, before
retracing to 92.454. The greenback is approaching this year's
high of 92.64 reached on Jan. 9. and is above the year's open at
92.24.
    “We’re pretty much back to where we were at the beginning of
the year, so a lot of the dollar weakness has been pretty much
wiped out,” said Sireen Harajli, foreign exchange strategist at
Mizuho in New York.
    The euro, which has been knocked by weaker-than-expected
economic data and growing doubts about when the European Central
Bank will normalize its monetary policy, fell 0.67 percent
against the greenback to $1.1998.
    The U.S. economy has shown signs of strength in 2018 that
few other developed economies can match.
    Sterling extended losses on Tuesday to below the $1.37 line
for the first time in 3-1/2 months after survey data showed
British manufacturing growth sliding to a 17-month low.

    Markets do not expect a change in interest rates from the
Federal Reserve at the conclusion of its meeting on Wednesday,
though analysts will be watching for any change in language and
indications that a June hike is likely.
    Investors are also focused on Friday's employment report for
April for further indications of the strength of the U.S.
economy and inflation pressures.
    Data on Tuesday showed that U.S. factory activity slowed for
a second straight month in April, weighed down by shortages of
skilled workers and rising capacity constraints.
    Geopolitical tensions, including around a U.S.-China trade
spat, have also subsided in recent weeks to support the dollar.
    “There was some concerns about the potential for trade wars
and the U.S. administration’s hard line on China. That seems to
have eased a little bit and given markets some sense of
comfort,” said Harajli.
    Traders said relatively illiquid markets because of holidays
across much of Europe and parts of Asia had exacerbated moves on
Tuesday.
    
    
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.2000        $1.2077     -0.64%         +0.03%      +1.2085     +1.1982
 Dollar/Yen       JPY=        109.7200       109.3300    +0.36%         -2.62%      +109.7900   +109.2500
 Euro/Yen         EURJPY=     131.72         132.05      -0.25%         -2.56%      +132.1300   +131.5800
 Dollar/Swiss     CHF=        0.9958         0.9905      +0.54%         +2.21%      +0.9969     +0.9906
 Sterling/Dollar  GBP=        1.3618         1.3769      -1.10%         +0.78%      +1.3773     +1.3590
 Dollar/Canadian  CAD=        1.2843         1.2838      +0.04%         +2.12%      +1.2914     +1.2820
 Australian/Doll  AUD=        0.7494         0.7531      -0.49%         -3.94%      +0.7546     +0.7474
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1952         1.1967      -0.13%         +2.25%      +1.1973     +1.1937
 Euro/Sterling    EURGBP=     0.8810         0.8771      +0.44%         -0.82%      +0.8822     +0.8761
 NZ Dollar/Dolar  NZD=        0.7007         0.7034      -0.38%         -1.11%      +0.7040     +0.6992
 Dollar/Norway    NOK=        8.0846         8.0139      +0.88%         -1.49%      +8.1030     +8.0085
 Euro/Norway      EURNOK=     9.7032         9.6812      +0.23%         -1.48%      +9.7235     +9.6744
 Dollar/Sweden    SEK=        8.8414         8.7477      +0.44%         +7.80%      +8.8705     +8.7391
 Euro/Sweden      EURSEK=     10.6120        10.5650     +0.44%         +7.86%      +10.6590    +10.5573
 

 (Additional reporting by Tommy Wilkes in London
Editing by Frances Kerry)
  
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