- Euro falls as risk sentiment sours
- Yen, Swiss franc both gain on safe-haven bids
- Tech share slide, Fed caution had earlier hobbled dollar
- Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh
(Recasts, adds comment, FX table, updates prices, changes byline, dateline; previous LONDON)
The dollar rallied from a two-week low on Tuesday as a sell-off in world stock markets spurred safe-haven bids and investors worried about slowing global growth.
Other safe-haven currencies such as the yen and Swiss franc gained as well.
"Dovish comments from the Fed that the world economy may be cooling off has dented investors' sentiment," said Viash Sreemuntoo, corporate trader at online FX broker XE.
Earlier, cautious comments overnight by Federal Reserve officials about the global economic outlook knocked the dollar to two-week troughs as it suggested the Fed could slow the pace of raising interest rates or that the tightening cycle is ending.
In midmorning trading, the dollar index, a measure of its value against a basket of six major currencies, rose 0.3 percent to 96.510 .DXY , off its weakest level since Nov. 7.
"With investors holding significant long U.S. dollar exposure, especially versus the yen, we think the dollar remains at risk of weakening further if the market's doubts about the Fed outlook are sustained – or increase further – especially as the broader dollar lift associated with seasonal demand around this time of year is typically at or close to a peak by now," said Shaun Osborne, chief FX strategist at Scotiabank in Toronto.
The euro also gave up its gains, spooked by a slide in European equities. Italian bank shares hit a two-year low and Italian bonds sold off again amid a continuing confrontation with the European Union over Rome's budget plans.
Europe's single currency was last down 0.4 percent at $1.1401 EUR= , off a two-week high earlier.
Persisting worries about the China-U.S. trade conflict and Brexit negotiations also kept investors jittery.
With investor nerves high, the yen added 0.1 percent to 112.48 JPY= .
U.S. 10-year Treasury yields US10YT=RR pulled back, removing some support for the greenback.
The dollar was also weighed down by weak U.S. data.
"For the U.S. equity market to stabilize, either the rest of the world will have to show better growth or the Fed will have to moderate its stance," Hans Redeker, global head of FX strategy, at Morgan Stanley, wrote in a client note.
"Both outcomes are U.S. dollar-negative and explain why rising U.S. equity volatility has failed to spill over into emerging markets."
Sterling was slightly lower against the dollar GBP= , but was firmer against the euro EURGBP= as Prime Minister Theresa May heads to Brussels for more Brexit talks.
In the cryptocurrency market, bitcoin BTC= lost another 10 percent to below $4,500 as sentiment soured further.
Currency bid prices at 10:01AM (1501 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.1397 $1.1451 -0.47% -4.99% +1.1472 +1.1394 Dollar/Yen JPY= 112.3900 112.5400 -0.13% -0.27% +112.6600 +112.3100 Euro/Yen EURJPY= 128.15 128.91 -0.59% -5.22% +129.0200 +128.1300 Dollar/Swiss CHF= 0.9932 0.9935 -0.03% +1.94% +0.9943 +0.9910 Sterling/Dollar GBP= 1.2831 1.2849 -0.14% -5.04% +1.2882 +1.2824 Dollar/Canadian CAD= 1.3245 1.3170 +0.57% +5.31% +1.3246 +1.3155 Australian/Doll AUD= 0.7251 0.7293 -0.58% -7.05% +0.7300 +0.7252 arEuro/Swiss EURCHF= 1.1323 1.1378 -0.48% -3.15% +1.1382 +1.1320 Euro/Sterling EURGBP= 0.8880 0.8912 -0.36% -0.03% +0.8922 +0.8876 NZ NZD= 0.6814 0.6836 -0.32% -3.84% +0.6869 +0.6816 Dollar/DolLarDollar/Norway NOK= 8.5497 8.4756 +0.87% +4.15% +8.5504 +8.4558 Euro/Norway EURNOK= 9.7467 9.7087 +0.39% -1.03% +9.7477 +9.6966 Dollar/Sweden SEK= 9.0617 9.0012 +0.19% +10.47% +9.0618 +8.9873 Euro/Sweden EURSEK= 10.3290 10.3097 +0.19% +4.98% +10.3300 +10.3030 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ GRAPHIC-World FX rates in 2018 2018 http://tmsnrt.rs/2egbfVh^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
