FOREX-Dollar Plunges as UK Budget U-turn Improves Market Sentiment

(Adds quotes, details; updates prices.) * Chart: Global exchange rates By Karen Brettell NEW YORK, Oct 17 (Reuters) – The dollar has fallen against a basket of major currencies and the pound sterling surged on Monday after Britain’s new finance minister scrapped most of the government’s ‘mini-budget’, while better-than-expected profits from Bank of America helped boost the risk appetite. Investors are also wondering if the Bank of Japan would intervene as the Japanese currency falls to its weakest level against the dollar in 32 years. Jeremy Hunt, who was appointed finance minister by Prime Minister Liz Truss on Friday, canceled swathes of the £45billion ‘mini budget’ that sparked market turmoil in which the pound soared record and the Bank of England was forced to intervene. “So far the pound has been the driving force in the FX market this month, and the big change announced by the UK government has restored confidence in the pound and removed the bid on the US dollar,” he said. said Adam Button, chief currency analyst at Forex Live. UK gilts rallied strongly after the news. Hunt replaced Kwasi Kwarteng, whose package of unfunded tax cuts on September 23 sparked a sell-off in the bond market. “For now, the market seems happy to give the new chancellor the time and space to get the house of government in order,” said Chris Beauchamp, chief market analyst at IG. The pound was last up 1.54% at $1.1348, after hitting $1.1440, the highest since Oct. 5. he called “an exaggeration”. The next major resistance level for the British currency is $1.15, he added. Risk sentiment also improved after Bank of America reported a weaker-than-expected decline in quarterly profit and said its consumer spending in the United States remained strong, although it was slowing. The dollar index against a basket of currencies fell 0.82% to 112.11. It remains just below a 20-year high of 114.78 reached on September 28. The Federal Reserve’s rapid interest rate increases have helped the dollar’s strength, but that may ease once the U.S. central bank reaches the point of pausing hikes, Fed Chairman St. Louis, James Bullard, said Saturday. The euro gained 1.19% against the greenback to $0.9838, the highest since Oct. 6. Traders are also on the lookout for any intervention from the Bank of Japan after the yen fell to a 32-year low at 148.97. Last month, Japan stepped in to buy the yen for the first time since 1998, after the Bank of Japan stuck to its ultra-low interest rate policy, which hurt the currency This year. Japanese authorities on Monday maintained their warnings to the market of a firm response to too-rapid declines in the yen, following last week‘s plunge and meetings of global financial leaders who acknowledged currency volatility. ================================================= ===== Bid ​​price of the currency at 15:14 (1914 GMT) Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid Previous change Session Dollar index 112.1100 113.0500 -0.82% 17.193% +113.2000 +111.9100 Euro/Dollar $0.9838 $0.9723 +1.19% -13.45% +$ 0.9852 +$ 0.9715 dollar/yen 148,9250 148,7850 +0.09% +29.36% +148,9550 +148.4000 Euro/yen 146.52 144.65 +1.29% +12.43% +146.6200 .19% +1.0045 +0.9944 Sterling / Dollar $1.1348 $1.1178 + 1.54% -16.08% + $1.1438 + $1.1175 Dollar / Canadian 1.3729 1, 3881 -1.10% +8.58% +1.3878 +1.3699 $0.6208 Euro / Swiss 0.9799 0.9774 +0.26% -5.50% +0.9808 +0.9743 EURO / Sterling 0.8666 0.8692 -0.30% +3.17% +0.8686 +0.8580 NZ$0.5625 0.5562 +1.20% -17.76% +$0.5625 . 10.5300 10.6750 -1.50% +19.35% +10.6700 +10.5075 Euro/Norway 10.3585 10.3921 -0.32% +3.50% +10.4031 +10, 2918 Dollar/Sweden 11 0.1538 11.2994 +0.02% +23.69% +11.3305 +11.1356 Euro/Sweden 10.9702 10.9676 +0.02% +7.24% +11 .0142 +10.9530 (Additional reporting by Amanda Cooper in London; Editing by Paul Simao and Angus MacSwan)

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