May 7, 2018 / 7:12 PM / 9 months ago

FOREX -Dollar hits strongest level of 2018 as euro falls

    * Weak German, euro zone data pressure euro
    * Speculators cut bearish dollar bets to 7-week low -CFTC 
    * Dollar bulls brush off Friday's jobs report
    * BOE, RBNZ both seen leaving rates unchanged on Thursday

 (Updates market action, adds quote)
    By Richard Leong
    NEW YORK, May 7 (Reuters) - The dollar hit a 2018 peak
against a basket of currencies on Monday as investors increased
bets that rising interest rates and inflation in the United
States would boost the greenback, while traders unwound their
bearish positions on the currency.
    The index that tracks the dollar against a basket of
currencies climbed to 92.974, its highest since December.
It was last up 0.2 percent at 92.792.
    Speculators trimmed their bets on a falling dollar to the
lowest in seven weeks last week, based on Commodity Futures
Trading Commission data released on Friday.
    Some analysts cautioned the dollar's two-week long bounce in
may be overdone.
    "At this juncture, much of the market expectations for
rising inflation and interest rates may already have been priced
into the dollar, and upside momentum may have been
overextended," said James Chen, head of research at Gain Capital
in Bedminster, New Jersey.
    Friday's somewhat disappointing U.S. payrolls report, which
showed hiring and wage growth fell short of expectations, did
not alter traders' outlook for further rate increases from the
Federal Reserve.
    "Nevertheless, the data was still expansionary, showing
tepid but positive growth," Boris Schlossberg, managing director
of FX strategy at BK Asset Management in New York, said of the
April jobs data. 
    "In contrast, today news from the eurozone only added to the
sense of dread in the region as consumer spending slowed
materially," he added. 
    Traders have scaled back expectations on the timing of when
the European Central Bank may raise interest rates following a
spate of disappointing regional economic readings.
    The euro broke below $1.19 for the first time this year in
the aftermath of weaker-than-expected data on German industrial
orders and euro zone investor sentiment.

    The euro shed 0.3 percent at $1.1924 after
touching $1.1896, the lowest in more than four months.
    The British pound traded up 0.27 percent at
$1.3562, bouncing off a four-month low of $1.3487 set last week.
Sterling has slumped in the past fortnight as investors reversed
expectations of a rate hike at the Bank of England's upcoming
meeting on Thursday amid soft domestic data.
    UK financial markets were closed for a bank holiday.
    The Reserve Bank of New Zealand will also meet on Thursday
and is expected to hold its key interest rate at a record low of
1.75 percent.
    The Kiwi was down marginally at $0.7020, holding
above its year-to-date low of $0.6985 set last week, Reuters
data showed.
    Currency bid prices at 3:00PM (1900 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1923        $1.1958     -0.29%         -0.61%      +1.1978     +1.1898
 Dollar/Yen       JPY=        109.0500       109.1100    -0.05%         -3.21%      +109.3900   +108.7600
 Euro/Yen         EURJPY=     130.02         130.49      -0.36%         -3.82%      +130.6000   +130.0000
 Dollar/Swiss     CHF=        1.0026         0.9997      +0.29%         +2.90%      +1.0056     +0.9985
 Sterling/Dollar  GBP=        1.3558         1.3530      +0.21%         +0.34%      +1.3575     +1.3516
 Dollar/Canadian  CAD=        1.2868         1.2844      +0.19%         +2.31%      +1.2890     +1.2840
 Australian/Doll  AUD=        0.7515         0.7540      -0.33%         -3.67%      +0.7544     +0.7494
 Euro/Swiss       EURCHF=     1.1954         1.1957      -0.03%         +2.27%      +1.1979     +1.1948
 Euro/Sterling    EURGBP=     0.8793         0.8836      -0.49%         -1.01%      +0.8841     +0.8779
 NZ Dollar/Dolar  NZD=        0.7015         0.7018      -0.04%         -1.00%      +0.7041     +0.6996
 Dollar/Norway    NOK=        8.0609         8.0537      +0.09%         -1.78%      +8.0875     +8.0312
 Euro/Norway      EURNOK=     9.6110         9.6310      -0.21%         -2.41%      +9.6480     +9.5986
 Dollar/Sweden    SEK=        8.8291         8.7984      -0.09%         +7.65%      +8.8616     +8.7914
 Euro/Sweden      EURSEK=     10.5260        10.5352     -0.09%         +6.98%      +10.5675    +10.5000

 (Additional reporting by Tommy Wilkes in London and Hideyuki
Sano in TOKYO
Editing by Hugh Lawson, Dan Grebler and Richard Chang)
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