November 21, 2018 / 3:24 PM / 21 days ago

FOREX-Dollar falters as risk appetite increases

    * Euro rallies even though EU rejects Italy budget
    * Italy Deputy PM denies being open to reviewing fiscal
plans
    * Wall Street rise helps risk appetite
    * Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh

 (New throughout, updates prices, market activity and comments,
adds FX table; new byline, changes dateline, previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Nov 21 (Reuters) - The dollar fell on Wednesday,
as risk appetite improved, bolstered by higher stocks and a
stronger euro, which was boosted by hopes for a resolution of
Italy's budget.
    Wall Street shares recovered after a steep two-day sell-off,
led by a rebound in Apple Inc and other major
technology stocks. For two days, U.S. equity losses had
bolstered safe-haven currencies such as the dollar, yen, and
Swiss franc.
    "The melting of risk appetite generated little
follow-through, offering risk appetite a pop," said Mark
McCormick, North American head of FX strategy.
    Another factor boosting risk appetite was optimism about the
Italian budget, even though the European Union rejected Rome's
fiscal plans for failing to comply with euro zone rules.
    In mid-morning trading, the dollar index was down 0.2
percent at 96.627.
    The euro, the largest component in the dollar index, rose
0.2 percent at $1.1392.
    The European Commission took its first step toward
disciplining Italy over its draft budget and said the government
should face EU action to reduce its deficit.
    Still, the euro rallied, especially after Italian Prime
Minister Giuseppe Conte expressed concern about the government
bond spread and pledged reforms.
    The euro spiked early on a report Italian Deputy Prime
Minister Matteo Salvini may be open to reviewing the fiscal plan
for 2019. Salvini later said he was not open to negotiations
over Italy's deficit target of 2.4 percent of gross domestic
product, though other aspects of the budget could be discussed.

    "Even if Italy becomes subject to the Excessive Deficit
Procedure it may be several weeks before that procedure begins,
and Italy will have several months to respond to the concerns
raised by the European Union," said Nick Bennenbroek, currency
strategist at Wells Fargo in New York.
    "Moreover, at the end of the day, it's possible that no
financial penalties would be imposed, and that any sanction
would be only symbolic," he added.
    The euro has risen in six out of the last seven sessions but
analysts said the currency remained vulnerable to the political
risks emanating from the third-largest economy of the 19-country
euro zone.
    The dollar has also felt some pressure as Federal Reserve
officials this week expressed concern about a potential global
slowdown, leading some investors to bet the rate-hike cycle was
near its end.
    The safe-haven Japanese yen fell against the
dollar, which rose 0.3 percent to 113.06.
    
    ========================================================
    Currency bid prices at 10:07AM (1507 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1402        $1.1370     +0.28%         -4.95%      +1.1424     +1.1364
 Dollar/Yen       JPY=        113.0200       112.7500    +0.24%         +0.32%      +113.1400   +112.6500
 Euro/Yen         EURJPY=     128.90         128.21      +0.54%         -4.65%      +129.0700   +128.1200
 Dollar/Swiss     CHF=        0.9944         0.9948      -0.04%         +2.06%      +0.9956     +0.9928
 Sterling/Dollar  GBP=        1.2797         1.2786      +0.09%         -5.29%      +1.2819     +1.2774
 Dollar/Canadian  CAD=        1.3288         1.3304      -0.12%         +5.66%      +1.3317     +1.3270
 Australian/Doll  AUD=        0.7264         0.7213      +0.71%         -6.88%      +0.7271     +0.7203
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1336         1.1314      +0.19%         -3.02%      +1.1343     +1.1311
 Euro/Sterling    EURGBP=     0.8906         0.8889      +0.19%         +0.28%      +0.8923     +0.8887
 NZ               NZD=        0.6840         0.6789      +0.75%         -3.46%      +0.6846     +0.6782
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        8.5286         8.5840      -0.65%         +3.92%      +8.5895     +8.5217
 Euro/Norway      EURNOK=     9.7245         9.7589      -0.35%         -1.26%      +9.7699     +9.7202
 Dollar/Sweden    SEK=        9.0389         9.0922      -0.34%         +10.21%     +9.0984     +9.0300
 Euro/Sweden      EURSEK=     10.3050        10.3400     -0.34%         +4.74%      +10.3520    +10.3050
 
 (Reporting by Gertrude Chavez-Dreyfuss in New York; additional
reporting by Tom Finn in London; Editing by David Gregorio)
  
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