* Dollar retreats as risk sentiment improves
* Carry trade has boosted demand for U.S. dollar
* Fed's Powell affirms that Fed on hold
(Recasts with euro bounce, adds quote, updates prices)
By Karen Brettell
NEW YORK, Feb 11 (Reuters) - The dollar retreated from a
four-month high against the euro on Tuesday as risk appetite
improved, following a weeklong rally as investors chased higher
returns in the United States.
The S&P 500 .SPX and the Nasdaq .IXIC opened at all-time
highs on Tuesday after China's foremost medical adviser on the
coronavirus outbreak said the epidemic may peak this month. .N
The death toll in mainland China from the outbreak climbed
past 1,000 on Tuesday, but the number of new confirmed cases
fell. "There's been a bit of a disjoint with the way the equity
market has been trading in the last couple of sessions and the
way the FX markets have been moving, and I think to some degree
we're seeing a bit of catchup on the FX side of things," said
Bipan Rai, North American head of FX strategy at CIBC Capital
Markets in Toronto.
Concerns about the economic impact of the coronavirus have
added a safety bid for the greenback in recent sessions, while
economic data has boosted the view that the U.S. economic
outlook is stronger than the euro zone's.
The dollar has also gained as low volatility across most of
the foreign exchange market has encouraged investors to seek out
carry trades, where they borrow in low-yielding currencies such
as the euro and the franc and invest in dollars or other
high-yielding currencies.
“One of the big prevailing narratives right now is for the
carry trade,” said Erik Nelson, a currency strategist at Wells
Fargo in New York. “As volatility seems to be nonexistent in the
FX market, a lot of people are piling into this short euro, long
higher beta, higher interest rate currencies.”
The euro EUR= fell as low as $1.0892 on Tuesday, the
lowest since Oct. 1, before bouncing back to $1.0921.
Comments by Federal Reserve Chairman Jerome Powell on
Tuesday affirmed the view that the U.S. central bank is unlikely
to change interest rates in the near term.
With risks like trade policy uncertainty receding and global
growth stabilizing, Powell signaled he saw no reason to adjust
U.S. interest rates, unless new developments cause a "material
reassessment" to the current outlook. Currency bid prices at 10:08AM (1508 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.0921 $1.0909 +0.11% -2.58% +1.0923 +1.0892
Dollar/Yen JPY= 109.8300 109.7400 +0.08% +0.89% +109.9400 +109.7500
Euro/Yen EURJPY= 119.95 119.76 +0.16% -1.64% +120.0000 +119.6100
Dollar/Swiss CHF= 0.9774 0.9770 +0.04% +0.98% +0.9787 +0.9766
Sterling/Dollar GBP= 1.2960 1.2913 +0.36% -2.26% +1.2968 +1.2896
Dollar/Canadian CAD= 1.3281 1.3315 -0.26% +2.27% +1.3320 +1.3281
Australian/Doll AUD= 0.6732 0.6686 +0.69% -4.12% +0.6735 +0.6682
Euro/Swiss EURCHF= 1.0675 1.0662 +0.12% -1.63% +1.0679 +1.0657
Euro/Sterling EURGBP= 0.8424 0.8447 -0.27% -0.35% +0.8458 +0.8421
NZ NZD= 0.6415 0.6383 +0.50% -4.77% +0.6416 +0.6380
Dollar/Dollar
Dollar/Norway NOK= 9.2361 9.2884 -0.56% +5.21% +9.2917 +9.2370
Euro/Norway EURNOK= 10.0893 10.1348 -0.45% +2.56% +10.1379 +10.0830
Dollar/Sweden SEK= 9.6287 9.6574 -0.21% +3.01% +9.6736 +9.6298
Euro/Sweden EURSEK= 10.5167 10.5387 -0.21% +0.45% +10.5505 +10.5176