February 8, 2018 / 9:35 PM / 9 months ago

FOREX-Dollar holds firm as U.S. stocks plummet

    * Dollar's bounce peters out on renewed market volatility
    * Higher U.S. Treasury yields underpin dollar
    * Dollar rebound likely unsustainable this year - poll

 (Updates market action, adds quote)
    By Gertrude Chavez-Dreyfuss and Richard Leong
    NEW YORK, Feb 8 (Reuters) - The dollar was little changed on
Thursday against a basket of currencies in choppy trading,
fading from a two-week high as  investors reduced bets against
the greenback on renewed turbulence in the stock and bond
markets.
    The dollar's loss of upward momentum reinforced the view the
currency is in a bear market trend.
    A sell-off across global stock markets since late Friday,
and bets that the United States could see at least three
interest rate hikes in 2018 due to improving U.S. fundamentals
have propelled the dollar in recent days.
    Yet the dollar lagged against the yen and Swiss franc as
investors sought safety on a day when Wall Street suffered steep
losses and the U.S. 10-year Treasury yield flirted with
four-year highs.
    "You have a split in flight-to-safety bids when you have
turbulent financial markets regardless of how well the global
economy is doing," said Jason Leinwand, chief executive officer
of FirstLine FX Currency Strategy in Randolph, New Jersey.
    The index that tracks the dollar versus six currencies
 was marginally higher at 90.292. It has gained 1.2
percent since last Friday, putting it on track for its largest
weekly gain since late October.
    John Taylor, Jr., president and founder of global macro and
FX research firm Taylor Global Vision was not too convinced
about the dollar's strength for most of this week.
   "The bounce in the dollar is already nearing an end. The
feeble move higher in dollar pairs like the dollar/Mexican peso
and the dollar/South African rand highlights the distaste for
the U.S. currency," he added.
    This belief ties in with a Reuters poll of strategists who
said the dollar's rebound was unlikely to be sustainable.

    The euro was down 0.1 percent at $1.2248, after
earlier falling to a two-week low. The single currency has
declined 2.6 percent since hitting a three-year high of around
$1.2536 just 10 days ago. 
    "The market is in consolidation mode," said Commerzbank
currency strategist Esther Reichelt in Frankfurt. "The dollar
performed relatively well during the stock market turmoil, and
this experience determined the market sentiment going forward."
    Traditional safe-havens such as the yen and Swiss franc,
meanwhile, have seen only modest gains during the recent stock
market volatility. But on Thursday, the dollar was both down 0.8
percent and 0.6 percent against the Swiss franc and yen
, respectively.
    Higher U.S. yields also underpinned the greenback's recent
rally. The 10-year Treasury yield edged up to 2.833
percent, not far below a four-year peak of 2.885 percent reached
on Monday.
========================================================
    Currency bid prices at 3:56PM (2056 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.2244        $1.2262     -0.15%         +2.07%      +1.2295     +1.2213
 Dollar/Yen       JPY=        108.6700       109.3100    -0.59%         -3.55%      +109.7800   +108.5900
 Euro/Yen         EURJPY=     133.08         134.07      -0.74%         -1.55%      +134.7900   +132.9500
 Dollar/Swiss     CHF=        0.9360         0.9434      -0.78%         -3.93%      +0.9469     +0.9356
 Sterling/Dollar  GBP=        1.3904         1.3880      +0.17%         +2.90%      +1.4065     +1.3847
 Dollar/Canadian  CAD=        1.2608         1.2567      +0.33%         +0.25%      +1.2612     +1.2546
 Australian/Doll  AUD=        0.7778         0.7821      -0.55%         -0.29%      +0.7843     +0.7780
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1460         1.1569      -0.94%         -1.96%      +1.1594     +1.1452
 Euro/Sterling    EURGBP=     0.8805         0.8834      -0.33%         -0.88%      +0.8841     +0.8733
 NZ Dollar/Dolar  NZD=        0.7220         0.7237      -0.23%         +1.89%      +0.7242     +0.7177
 Dollar/Norway    NOK=        7.9327         7.9037      +0.37%         -3.34%      +7.9491     +7.8641
 Euro/Norway      EURNOK=     9.7124         9.6976      +0.15%         -1.38%      +9.7310     +9.6654
 Dollar/Sweden    SEK=        8.1226         8.0813      +0.34%         -0.96%      +8.1416     +8.0447
 Euro/Sweden      EURSEK=     9.9480         9.9143      +0.34%         +1.11%      +9.9674     +9.8845
    

    
 (Additional reporting by Gertrude Chavez-Dreyfuss in New York;
Jemima Kelly in London; Editing by Andrew Hay and Diane Craft)
  
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