- Fed tightening cycle nearing end -analyst
- Mexican peso rises as U.S. reaches trade deal with Mexico
- Turkish lira slides 2.2 percent as markets reopen
- Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh
(Adds U.S.-Mexico deal, updates prices)
The dollar fell on Monday, hurt by comments from Federal Reserve Chairman Jerome Powell on Friday that seemed to suggest a slower pace of monetary tightening and as the currency's safe-haven appeal eased after the United States and Mexico reached a trade deal.
The two sides agreed to replace the North American Free Trade Agreement, or NAFTA, and talks with Canada were expected to begin immediately in hopes of reaching a final agreement by Friday, a senior U.S. trade official said.
That pushed the Mexican peso MXN= and Canadian dollar CAD=D3 higher against the greenback, up 1.3 percent and 0.3 percent respectively, and boosted risk appetite across financial markets.
At a symposium in Jackson Hole, Wyoming, Powell emphasized the central bank's push to raise interest rates despite President Donald Trump's criticism of higher borrowing costs. But he also said the Fed sees no clear sign of inflation accelerating above 2 percent.
His comments did little to change market expectations for rate hikes in September and December and disappointed some dollar bulls hoping for a more hawkish message.
Since hitting a more than one-year high in mid-August, the dollar has fallen more than 2 percent amid remarks from Trump criticizing the Fed for raising interest rates at a time when the government was trying to stimulate the economy.
"The takeaway from Jackson Hole is that the Fed may not look to tighten much more than is currently priced into markets," said Mark McCormick, North American head of FX strategy at TD Securities in Toronto.
"It is clear the Fed cycle is close to nearing the end-game," he added.
Interest rate hike expectations have supported the dollar this year as the U.S. economy tracked a stable growth path.
The Treasury yield curve USUS10=TWEB on Monday reached its flattest since 2007 - a factor seen as reducing support for the dollar - in the wake of Powell's speech.
In midday trading, the dollar index, which measures the greenback against a basket of six major currencies .DXY , was down 0.2 percent at 94.97 after slipping more than 0.5 percent in the previous session.
The euro rose 0.2 percent to $1.1647 EUR= after climbing as high as $1.1654, its strongest since Aug. 2. The currency advanced more than 0.7 percent on Friday.
Overall, financial markets showed a healthier appetite for risk as U.S. stocks rose, curbing the dollar's safe-haven appeal.
In emerging markets, the Turkish lira weakened more than 2 percent against the dollar on Monday after a week-long holiday, hit by persisting concern about a diplomatic rift with Washington over a detained U.S. pastor.
======================================================== Currency bid prices at 11:43AM (1543 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.1671 $1.1621 +0.43% -2.71% +1.1680 +1.1594 Dollar/Yen JPY= 111.0300 111.2200 -0.17% -1.46% +111.3600 +110.9400 Euro/Yen EURJPY= 129.60 129.26 +0.26% -4.13% +129.7000 +128.8200 Dollar/Swiss CHF= 0.9799 0.9831 -0.33% +0.57% +0.9845 +0.9800 Sterling/Dollar GBP= 1.2885 1.2843 +0.33% -4.64% +1.2893 +1.2830 Dollar/Canadian CAD= 1.2972 1.3027 -0.42% +3.14% +1.3067 +1.2954 Australian/Doll AUD= 0.7342 0.7324 +0.25% -5.88% +0.7349 +0.7308 arEuro/Swiss EURCHF= 1.1442 1.1425 +0.15% -2.11% +1.1448 +1.1411 Euro/Sterling EURGBP= 0.9058 0.9047 +0.12% +1.97% +0.9061 +0.9034 NZ Dollar/Dolar NZD= 0.6692 0.6690 +0.03% -5.56% +0.6701 +0.6671 Dollar/Norway NOK= 8.3221 8.3261 -0.05% +1.40% +8.3676 +8.3174 Euro/Norway EURNOK= 9.7154 9.6815 +0.35% -1.35% +9.7185 +9.6763 Dollar/Sweden SEK= 9.0997 9.1248 +0.16% +10.95% +9.1561 +9.0943 Euro/Sweden EURSEK= 10.6236 10.6068 +0.16% +7.97% +10.6310 +10.5970
