* Graphic: World FX rates in 2018
By Vatsal Srivastava
Oct 11 (Reuters) - The dollar was steady against a basket of
currencies on Thursday after spooked investors drove U.S. stocks to
their worst fall in nearly eight months overnight.
The dollar index , a gauge of its value against six major
currencies, fell 0.11 percent to 95.407 on Thursday, after hitting a
high of 95.79 in the previous session.
The safe-haven yen strengthened to 112.25 against the dollar,
its highest this month, taking heart from risk aversion in the wake of
warnings from the IMF over global growth and financial stability.
The U.S. Federal Reserve's apparent determination to raise
interest rates over the next 12 months has driven up U.S. Treasury
yields, which have been further bolstered by good economic data.
"We expect rising inflation to keep the Fed hiking interest
rates at its current once-a-quarter pace until the middle of
2019," Capital Economics said in a note.
Expectations of hawkish rate rises may have been at work on
Wednesday when sellers sent the Nasdaq to close at 7044.49, its
lowest level since early July.
The S&P 500 and Dow Jones Industrial Average weren’t
too far behind, both falling more than 3 percent.
Benchmark 10-year yields cooled off from a seven-year high of
3.261 percent hit on Tuesday to 3.1667 percent.
The euro rose 0.16 percent to 1.1536 on Thursday after hitting
a low of 1.1477 in the previous session.
EU Brexit negotiator Michel Barnier said on Wednesday the parties
had agreed on much of the withdrawal agreement ahead of a summit of
the bloc's 28 national leaders next week.
But the euro's gains are likely to be limited with markets worried
about the sustainability of Italy's public finances, despite Italian
Economy Minister Giovanni Tria stating that the government would do
everything in its power to regain the confidence of financial markets.
Sterling traded at $1.3207, its highest in a week, as investors
bet on a reasonably British departure from EU in March.
The pound has gained more than 2 percent versus the dollar over
the last five trading sessions.
The Australian dollar , often viewed as a gauge of global risk
appetite, traded flat at 0.7068 on Thursday.
The New Zealand's dollar , or kiwi, traded at 0.6454, near a
multiyear low of 0.6422 seen on Monday.
"Traders will be focussing on the risk-sensitive pairs as we
move through the day’s trading with the Aussie and kiwi in sharp focus
as they are sitting at range extremes," said Nick Twidale of
Gold was flat at $1,194, holding below the psychological
(Reporting by Vatsal Srivastava; editing by Eric Meijer)