February 8, 2018 / 5:01 PM / 2 months ago

FOREX-Dollar hits two-week highs, but rally seen short-lived

    * Higher U.S. Treasury yields underpin dollar
    * Dollar rebound likely unsustainable this year - poll
    * Dollar likely in bear market correction-analysts
    * Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh

 (Recasts, updates prices, adds comment, FX table, changes
byline, dateline; previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Feb 8 (Reuters) - The dollar hit two-week highs
against a basket of currencies in choppy trading on Thursday as
investors reduced bearish bets on the greenback, though many in
the market saw the rally fast losing momentum.
    Analysts suggested this latest dollar strength was just a
one-off bounce in the currency's overall bear market trend,
driven in part by an improving near-term U.S. fundamental
picture.     
    A selloff across global stock markets since late Friday and
bets that the United States could see at least three interest
rate hikes in 2018 have driven the dollar up in recent days. 
    The greenback has gained around 1.3 percent against its
basket in the past week, on track to post its largest
weekly gain since late October after rising in four of the last
five sessions.
    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.
    In late morning trading, the dollar index was up 0.1
percent on the day at 90.319.
    "We expect any bounces are likely to be short-lived and
offer better levels to sell," said Mark McCormick, North
American head of FX strategy, at TD Securities in Toronto.
    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 $1.2249, 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
against the Swiss franc and yen.  
    Higher U.S. yields also underpinned the greenback's recent
rally.
    The yield on benchmark 10-year Treasury notes
stood at 2.867 percent, compared with its U.S. close of 2.843
percent on Wednesday.
    ========================================================
    Currency bid prices at 11:35AM (1635 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.2251        $1.2262     -0.09%         +2.13%      +1.2295     +1.2213
 Dollar/Yen       JPY=        109.1100       109.3100    -0.18%         -3.17%      +109.7800   +108.9000
 Euro/Yen         EURJPY=     133.69         134.07      -0.28%         -1.10%      +134.7900   +133.2700
 Dollar/Swiss     CHF=        0.9382         0.9434      -0.55%         -3.71%      +0.9469     +0.9358
 Sterling/Dollar  GBP=        1.3943         1.3880      +0.45%         +3.19%      +1.4065     +1.3847
 Dollar/Canadian  CAD=        1.2595         1.2567      +0.22%         +0.14%      +1.2612     +1.2546
 Australian/Doll  AUD=        0.7790         0.7821      -0.40%         -0.14%      +0.7843     +0.7783
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1496         1.1569      -0.63%         -1.65%      +1.1594     +1.1452
 Euro/Sterling    EURGBP=     0.8784         0.8834      -0.57%         -1.11%      +0.8841     +0.8733
 NZ Dollar/Dolar  NZD=        0.7200         0.7237      -0.51%         +1.61%      +0.7237     +0.7177
 Dollar/Norway    NOK=        7.9301         7.9037      +0.33%         -3.37%      +7.9491     +7.8641
 Euro/Norway      EURNOK=     9.7168         9.6976      +0.20%         -1.34%      +9.7310     +9.6654
 Dollar/Sweden    SEK=        8.1215         8.0813      +0.39%         -0.98%      +8.1416     +8.0447
 Euro/Sweden      EURSEK=     9.9526         9.9143      +0.39%         +1.15%      +9.9674     +9.8845
 
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Jemima Kelly in London; Editing by Andrew Hay)
  
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