Dollar rides 'Trump trade' toward third weekly gain
Dollar steady on US economic resilience, euro sags
Chinese yuan eyes further stimulus details
Bitcoin gains on 'Trump trade'
Updates throughout; refreshes prices at 0906 GMT
By Tom Westbrook and Amanda Cooper
SINGAPORE/LONDON, Oct 18 (Reuters) -The dollar was headed for its third weekly gain in a row on Friday, helped by a dovish European Central Bank and strong U.S. data that is pushing out expectations for how fast U.S. rates can fall, particularly if Donald Trump wins the presidency.
A slew of economic data from China, including third-quarter growth figures, was met with a muted response from markets, though subsequent comments from the country's central bank providing further details of Beijing's stimulus measures helped lift Chinese assets broadly.
Data Thursday showed U.S. consumer spending beat expectations last month, which added to the belief among investors that U.S. rates may not need to drop as quickly as many thought just a couple of weeks ago.
The European Central Bank cut euro zone interest rates by a quarter point on Thursday, in line with expectations, in a nod to the deterioration in economic growth across the region.
The euro, which is around its lowest since early August, is heading for its largest three-week decline against the dollar since 2022, down around 3%, as traders are now pricing in back-to-back rate cuts at the ECB's upcoming meetings.
Adding to the dollar's shine was the rising prospect of Trump winning the November election, since his proposed tariff and tax policies are seen as likely to keep U.S. interest rates high.
"I think there is potential for further decline in the euro. The ECB has cut rates and didn't give any hints about cutting in December, but given where inflation is, and given that the economic outlook is deteriorating, they are focussing on attempting to shore up the economy a bit more," City Index market strategist Fiona Cincotta said.
"I see potential for a future drop in the euro towards that $1.08 level," she said.
The euro EUR=EBS was last up 0.1% on the day at $1.08378, having fallen for 14 out of the last 16 sessions.
Separately, four sources close to the matter told Reuters the ECB was likely to cut again in December unless economic data suggests otherwise.
Meanwhile, markets have been disappointed at the lack of further details offered by Chinese authorities on plans to revive the economy, and the yuan CNY=CFXS is headed for its largest weekly fall in more than 13 months against the dollar.
The Chinese currency edged up after the People's Bank of China (PBOC) officially launched the Securities, Fund, and Insurance Swap Facility (SFISF) on Friday and as policymakers signalled the potential for further monetary easing ahead alongside other support measures to prop up the economy.
Those came shortly after Friday's data dump that showed China's third-quarter growth numbers were slightly better than expected, but property investment fell more than 10% in the first nine months of the year. Retail sales and industrial production picked up in September.
"The overall tone is actually not bad, given that the nominal GDP itself has also stabilised," Ho Woei Chen, an economist at UOB, said.
"The focus is actually on what the government is going to do next in terms of the size of the fiscal stimulus."
The offshore yuan CNH=D3 was last at 7.1166, leaving the dollar down 0.27% on the day. The Australian dollar AUD=D3, often used as a more liquid proxy for the yuan, was up 0.26% at $0.6713.
The dollar traded 0.2% down on the day against the yen JPY=EBS at 149.925, having broken above the 150 level this week for the first time since early August.
The pound GBP=D3 was one of the stronger performers against the dollar, rising 0.2% to $1.3037 after UK data showed retail sales grew more than expected in September, offering investors some reassurance about the strength of the British economy.
Bitcoin has got a lift from Trump's prospects BTC= since his administration is seen as taking a softer line on cryptocurrency regulation. It was last at $67,915, up more than 10% since Oct. 10.
World FX rates https://tmsnrt.rs/2RBWI5E
Additional reporting by Tom Westbrook and Rae Wee in Singapore; Editing by Jamie Freed, Kim Coghill and Andrew Heavens
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
