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FOREX-Dollar hits 1-month low vs key rivals after Trump news conference

Published 12/01/2017, 07:51 am
Updated 12/01/2017, 08:00 am
FOREX-Dollar hits 1-month low vs key rivals after Trump news conference
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* Trump disappoints expectations for pro-growth message

* Dollar hits one-month low vs yen of 114.26 yen

* Mexican peso bucks trend, hits record low vs dollar (Updates prices, adds comments)

By Sam Forgione

NEW YORK, Jan 11 (Reuters) - The U.S. dollar fell to a one-month low against a basket of major rivals on Wednesday, reversing an early rally after a news conference held by President-elect Donald Trump disappointed dollar bulls who were expecting a pro-growth message.

The greenback, which hit one-week highs against the euro and franc and a three-month high against sterling before the conference, turned negative against those currencies after Trump attacked U.S. intelligence agencies and denounced claims he had been caught in a compromising position in Russia but did not elaborate on his economic policy agenda. have been betting Trump will boost public spending and spur repatriation of overseas funds by U.S. companies, policies expected to bring higher inflation and induce the Federal Reserve to raise interest rates at a steady pace.

Those bets have driven the dollar index, which measures the greenback against a basket of six major currencies, up 4 percent since the Nov. 8 election and to a 14-year high of 103.820 on Jan. 3 .DXY .

The dollar index, which hit a one-week high before the conference of 102.950, sank to its lowest since Dec. 14 at 101.280 after it had ended. The index pared losses later in afternoon U.S. trading and was last down 0.15 percent at 101.860.

"The market was disappointed by Trump's lack of specificity and details on his fiscal spending plans," said Kathy Lien, managing director at BK Asset Management in New York.

The euro rose as much as 0.6 percent against the dollar after the conference to a session high of $1.0622, just below an 11-day high of $1.0626 struck on Tuesday and rising from a one-week low of $1.0455 struck earlier.

The dollar sank about 1.3 percent against the yen JPY= to a one-month low of 114.26 yen after gaining as much 0.9 percent to 116.85 yen before the conference. Sterling, which had fallen more than 1 percent to a three-month low of $1.2038 before Trump's comments, later rallied 0.8 percent to $1.2273.

"The market had some unrealistic expectations" for the press conference, said Steven Englander, managing director and global head of G10 FX strategy at Citigroup (NYSE:C) in New York.

The Mexican peso hit a fresh record low against the dollar of 22.0440 pesos MXN=D2 , marking an exception to the broad dollar weakness after Trump warned U.S. auto companies would face a high tax for products made south of the border.

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