FOREX-Dollar pauses for breath, hovers below 16-month top

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HONG KONG, Nov 18 (Businesshala) – The dollar fell below a 16-month peak in Asian trade on Thursday, after losing ground on the New Zealand dollar, falling against the pound and the yen overnight as traders assessed whether the US currency The recent boom was starting to stall.

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Markets’ assessments of global central banks’ differing responses to rising inflation have largely propelled currencies in recent weeks.

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The New Zealand dollar jumped 0.38% to $0.7023 on Thursday after a central bank survey that expects near-term inflation to pick up in the fourth quarter.

A day earlier, sterling rose 0.5% to a one-week high against the dollar after the Bank of England was pressured to hike rates at its meeting next month following a spike in Britain’s October inflation.

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The British currency was at $1.3502, slightly higher that day.

Against the Japanese currency, the dollar fell to a low of 113.86 yen on Thursday, but was still eyeing Wednesday’s 4-1/2-year high of 114.97.

On Thursday, the euro was at $1.1327, close to a 16-month low.

Strong US retail sales data earlier this week added fuel to the dollar’s recent rally, which last week followed a strong US inflation print on market bets that the Federal Reserve would have to raise rates in the middle of next year.

The dollar index, which measures the currency against a basket of six rivals, rose to its highest level since mid-July 2020 at 96.226 on Wednesday.

However, “the stability of the current dollar strength over the next few months looks far from certain,” said FX strategist Luc Luyt of Pikett Wealth Management.

“The Fed’s market expectations are beginning to be particularly bullish, suggesting a limited tailwind for the US dollar going forward from that factor.”

However, others saw the decline in the dollar as a buying opportunity.

“The recent downside has been hard to come by, but anything in the low of 95 looks like a buying opportunity,” analysts at Westpac said in a note.

Elsewhere, commodity currencies were hurt by oil prices, which fell to six-week lows.

The Canadian dollar was at 1.2622 per US dollar, hitting a six-week low. Markets are expecting the Bank of Canada to start raising interest rates early next year.

The Australian dollar was at $0.7263, also at a six-week low.

Bitcoin was down 0.6% at around $60,000.

Reporting by Alan John; Editing by Sri Navaratnam and Ana Nicolasi da Costa

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