FOREX-Dollar rally fades but view on Fed taper intact

Tue Jan 21, 2014 4:22pm EST
 
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* Dollar supported by expectations for more Fed tapering

* WSJ says Fed may announce further tapering next week

* Euro slips after German ZEW survey

* Canadian dollar drops to four-year low vs U.S. dollar

* IMF raises global economic growth forecasts

By Daniel Bases

NEW YORK, Jan 21 (Reuters) - The dollar's early rally on Tuesday, which was sparked by a rise in U.S. Treasury yields on speculation the Federal Reserve would further reduce its bond-buying stimulus, ran out of steam for lack of follow-through buying, analysts said.

However, the overall trend for a stronger dollar is backed by improving economic fundamentals and generally higher interest rates.

"The trend is in line with what we have seen on a macro-economic level. I wouldn't read too much into one day's moves, because overall the trend of a stronger dollar remains intact," said Alvise Marino, currency strategist at Credit Suisse in New York.   Continued...