(Corrects typographical error in headline.)
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
* Dollar supported after Fed as stocks swoon
* Euro hit after ECB member drops rate cut hint
* Concern about equity short-squeeze unsettles traders
By Stanley White
TOKYO, Jan 28 (Reuters) - The dollar extended gains against
most currencies on Thursday as a stock market rout triggered by
concerns about excessive valuations boosted safe-harbour demand
for the U.S. currency.
The euro nursed losses after a European Central Bank member
warned that interest rate cuts are possible to curb the common
currency's recent gains. The Australian and New Zealand dollars, two currencies
considered a barometer of risk appetite, also fell against their
U.S. counterpart in a sign of waning market confidence.
Concerns about a short-squeeze among hedge funds, worries
about corporate earnings, and delays in coronavirus vaccinations
have slammed the brakes on a heady rally in global equities,
which could continue to lift the dollar in the short term.
"Risk aversion supporting the dollar is a healthy correction
after a one-way rise in risk assets," said Masafumi Yamamoto,
chief currency strategist at Mizuho Securities.
"The base scenario of economic acceleration in the second
half of the year remains intact. The Aussie will recover but the
euro will struggle."
The dollar edged up to 104.27 yen JPY=D3 following a 0.4%
gain on Wednesday.
Against the euro EUR=D3 , the dollar stood at $1.2094,
close to a one-week high.
The British pound GBP=D3 fell for a second consecutive
session to $1.3673.
The dollar index =USD stood at 90.742, holding onto a 0.6%
gain on Wednesday.
Asian stocks were awash in a sea of red and futures pointed
to a weak start to European trade on Thursday after U.S. stocks
suffered their biggest one-day percentage drop in three months
on Wednesday. In addition to concerns about corporate earnings and the
economic outlook, worries that hedge funds squeezed out of short
positions in GameStop Corp GME.N and similar companies will
take profits on other assets also fuelled risk aversion.
The U.S. Federal Reserve kept monetary policy unchanged as
expected on Wednesday but did signal some concern about the pace
of economic recovery, which some traders said is another
negative factor. U.S. gross domestic product data is due later on Thursday to
gauge the strength of the world's largest economy as it
struggles with the coronavirus pandemic.
The onshore yuan CNY=CFXS briefly touched a one-week low
of 6.4946 per dollar and other Asian currencies also fell
against the dollar, highlighting strength in the greenback.
The Australian dollar AUD=D3 fell to $0.7634, while the
New Zealand dollar NZD=D3 slid to $0.7135 as investors sold
currencies with close ties to the global commodities trade to
trim riskier positions.
========================================================
Currency bid prices at 2:20PM (0520 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.2094 $1.2114 -0.16% -1.01% +1.2110 +1.2081
Dollar/Yen JPY=D3 104.2750 104.0900 +0.19% +0.97% +104.3650 +104.1500
Euro/Yen EURJPY= 126.12 126.07 +0.04% -0.63% +126.2400 +126.0000
Dollar/Swiss CHF=EBS 0.8893 0.8889 +0.03% +0.51% +0.8904 +0.8889
Sterling/Dollar GBP=D3 1.3673 1.3692 -0.14% +0.08% +1.3692 +1.3651
Dollar/Canadian CAD=D3 1.2823 1.2806 +0.17% +0.74% +1.2835 +1.2800
Aussie/Dollar AUD=D3 0.7634 0.7664 -0.39% -0.77% +0.7666 +0.7621
NZ NZD=D3 0.7135 0.7159 -0.34% -0.64% +0.7161 +0.7131
Dollar/Dollar
All spots FX=
Tokyo spots AFX=
Europe spots EFX=
Volatilities FXVOL=
Tokyo Forex market info from BOJ TKYFX
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates https://tmsnrt.rs/2RBWI5E
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>