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(Bloomberg) -- The dollar rose for the first day in five, as traders unwound cross positions amid steep drops in the pound and the Swedish krona.
The greenback held gains versus most of its G-10 peers. It advanced more than 0.4 percent against both the pound and the krona, lifting the Bloomberg dollar index 0.13 percent. Flows were described as modest by traders in London, Toronto and New York as the market eyed several potential fresh drivers, including economic data and a flurry of central bank speakers from the U.S. and Europe.
- The dollar rose to a fresh daily high after data showed September PPI climbed 0.4% m/m ex-food and energy, double estimates, putting the y/y rate at 2.2% vs estimates at 2.0%. Friday’s U.S. CPI and retail sales reports will be closely watched after the FOMC minutes Wednesday showed some members remain concerned about the sluggish pace of inflation
- The pound fell to a daily low vs both the dollar and the euro after a report said that Brexit talks were deadlocked, increasing the risk of a so-called hard Brexit; GBP fell as much as 0.8% vs the dollar and was lower against most of its G-10 peers as traders unwound sterling cross trades, buying yen and euro among other currencies
- The Swedish krona fell 0.6% vs USD and 0.5% vs the shared currency after Swedish CPI inflation rose less than expected
- EUR/USD fell to a fresh daily low under 1.1830, extending its decline from the session high 1.1880 where leveraged accounts were quick to unwind recently set longs to lock in profits, according to traders in Europe familiar with the transactions who asked not to be identified because they are not authorized to speak publicly. EUR fell below technical support from its 55- and 21-DMAs, as earlier demand for EUR/GBP faded after that pair rose to its highest in a month
- Traders continue to watch developments in Catalonia after PM Rajoy issued an ultimatum for early next week to the regional governor to clarify whether independence has been declared, a demand that may lead to steps to revoke the region’s autonomy
- Despite broader dollar gains, USD/JPY was trading near the session low of 112.21 as GBP/JPY declined as much as 1% on unwind of stale positions
- Markets will keep a close eye on central bank officials that are gathering in Washington for the annual World Bank/IMF meetings. Additional remarks are expected from Fed’s Brainard and Powell
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