Dollar pulls back after skittling world currencies

Thu Nov 24, 2016 11:39am EST
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By Marc Jones

LONDON (Reuters) - The dollar surged to a near 14-year high before pulling back on Thursday, clocking up records against a range of other top world currencies and skittling emerging markets.

Stronger data from the world's biggest economy had underpinned the greenback's gains, which were further amplified by thinner volumes as U.S. traders stayed away for the Thanksgiving holiday.

It was off its highs as Europe wound down but had earlier pushed its way past more of last year's peaks against the euro to reach $1.0515, with only the March 2015 high of $1.0457 standing in the way of a drive toward parity. [FRX/]

The yen JPY= had skidded to an eight-month low and China's yuan CNH=D3 to an 8-1/2 year low, while the highly sensitive Turkish lira TRY= and Indian rupee IDR= hit new troughs as warning lights flashed in emerging markets. [EMRG/FRX]

"There doesn't seem to be anything stopping U.S. yields going higher in the near-term so I think people are going to stay on the dollar trend," State Street Global Markets' head of global macro strategy, Michael Metcalfe, said.

"The only risk to this are that the dislocations in markets outside of the U.S., particularly in emerging markets, get to a point where they start to feed back into concerns (for the Federal Reserve as it looks to raise interest rates)," he said.

In contrast to all the FX noise, European shares .FTEU3 saw a broadly quiet day, with most of the main bourses <0#.INDEXE> inching up on gains from chemical and insurance sector stocks but capped by weaker banks. [.EU]

German business confidence data showed firms remained unfazed, for now at least, by the U.S. election win for Donald Trump and the political uncertainty bubbling in the euro zone.   Continued...

U.S. dollar notes are seen in this November 7, 2016 picture illustration. Picture taken November 7. REUTERS/Dado Ruvic/Illustration