October 16, 2018 / 6:25 PM / 5 months ago

FOREX-Dollar steady as stock gains show improving risk sentiment

    * Emerging markets outperform, safe-haven currencies soften
    * Consolidating yields reduce demand for dollar

 (Adds Fed minutes on Wednesday, updates prices)
    By Karen Brettell
    NEW YORK, Oct 16 (Reuters) - The U.S. dollar index was
little changed on Tuesday while emerging market currencies
outperformed, as rising stock markets reflected an improved risk
    The three main Wall Street indexes each rose more than 1.5
percent as upbeat earnings from blue-chips such as Johnson &
Johnson and Goldman Sachs eased jitters over the
impact of rising interest rates and tariffs on corporate
    “It seems as if we have a risk-on tone. Equity prices seem
to be rising globally again and reversing a little bit of the
panic that we saw last week,” said Mark McCormick, North
American head of FX strategy at TD Securities in Toronto.
    The greenback was supported last week as benchmark 10-year
Treasury yields surged to a seven-year high of 3.26
percent, while stocks tumbled.
    Yields are now consolidating at around 3.16 percent,
reducing demand for the dollar. The improved risk tone also
reduced demand for safe-haven currencies such as the Japanese
yen and Swiss franc.
    “It’s a lack of negative headlines today, which if anything
else is just a change from what we’ve seen,” said Erik Nelson, a
currency strategist at Wells Fargo in New York. “The
risk-sensitive emerging currencies are particularly
outperforming while the yen and the Swiss franc are on the soft
    The MSCI Emerging Market Currency Index rose 0.47 percent
    Concerns about rising tensions between Western powers and
Saudi Arabia have weighed on markets this week. Saudi Arabia has
been under pressure since prominent Saudi journalist Jamal
Khashoggi, a critic of Riyadh and a U.S. resident, disappeared
on Oct. 2 after visiting the Saudi consulate in Istanbul.

    U.S. Secretary of State Mike Pompeo met Saudi Arabia's king
and crown prince to discuss the disappearance of Khashoggi on
Tuesday, and Turkey's foreign minister said Pompeo would bring
information about the case to Ankara.
    The next economic focus for markets will be the release of
the minutes from the Federal Reserve's September meeting on
Wednesday, which will be evaluated for any new indications on
how many further rate increases are likely.
    Interest rate futures traders are pricing in a 77 percent
likelihood that the Federal Reserve will again raise rates at
the U.S. central bank's December meeting, according to the CME
Group's FedWatch Tool.
    Data on Tuesday showed that U.S. industrial production
increased for a fourth straight month in September, boosted by
gains in manufacturing and mining output, but momentum slowed
sharply in the third quarter.
    Currency bid prices at 2:03PM (1803 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1574        $1.1577     -0.03%         -3.52%      +1.1621     +1.1566
 Dollar/Yen       JPY=        112.2300       111.7600    +0.42%         -0.39%      +112.2900   +111.7300
 Euro/Yen         EURJPY=     129.91         129.41      +0.39%         -3.90%      +130.2900   +129.4200
 Dollar/Swiss     CHF=        0.9906         0.9868      +0.39%         +1.67%      +0.9908     +0.9859
 Sterling/Dollar  GBP=        1.3190         1.3150      +0.30%         -2.38%      +1.3235     +1.3141
 Dollar/Canadian  CAD=        1.2929         1.2990      -0.47%         +2.81%      +1.2998     +1.2916
 Australian/Doll  AUD=        0.7138         0.7130      +0.11%         -8.50%      +0.7151     +0.7113
 Euro/Swiss       EURCHF=     1.1467         1.1426      +0.36%         -1.90%      +1.1478     +1.1429
 Euro/Sterling    EURGBP=     0.8773         0.8805      -0.36%         -1.24%      +0.8813     +0.8753
 NZ               NZD=        0.6585         0.6549      +0.55%         -7.07%      +0.6596     +0.6545
 Dollar/Norway    NOK=        8.1338         8.1503      -0.20%         -0.89%      +8.1618     +8.1179
 Euro/Norway      EURNOK=     9.4174         9.4402      -0.24%         -4.38%      +9.4474     +9.4182
 Dollar/Sweden    SEK=        8.8995         8.9516      -0.64%         +8.51%      +8.9626     +8.8828
 Euro/Sweden      EURSEK=     10.3018        10.3680     -0.64%         +4.70%      +10.3780    +10.2960
 (Additional reporting by Saikat Chatterjee in London
Editing by Susan Thomas and Leslie Adler)
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