Dollar falls on reduced fears over protracted strike on Syria

Dollar falls on reduced fears over protracted strike on Syria
* Investors brush off U.S. retail sales rebound in March
* Traders hope for no prolonged Western military strike against Syria
* Sterling climbs to highest level since January
* U.S. Treasury currency report brings no surprises for markets

(Updates market action, adds analyst note)
By Richard Leong
NEW YORK, April 16 (Reuters) - The dollar fell broadly on Monday on hopes that a
U.S.-led strike on Syria would not lead to escalation, rekindling some appetite for stocks
and other risky assets and spurring investors to reduce safe-haven holdings of the
Government data that showed a rebound in U.S. store sales in March failed to lift the
dollar, which has been pressured by concerns over a trade war between the United States and
China, the world's two biggest economies.
"The action may be more limited than previously thought and that's helped market
sentiment," Eric Viloria, currency strategist at Wells Fargo Securities in Stamford,
Connecticut, said of a weekend missile strike against Syria.
The United States, Britain and France said their bombing was aimed at three chemical
weapons facilities in retaliation for a suspected poison gas attack in Douma by the Assad
For now, the three Western nations signaled there will be no further strikes.
The MSCI world equity index, which tracks shares in 45 nations, rose
0.51 percent, to 513.12.
An index that tracks the dollar against a basket of six currencies fell 0.39
percent, to 89.452. The dollar index hit a two-week low of 89.355 last week.
Despite widening interest rate differentials in its favor and the widest yield gap
between two-year U.S. and German debt in nearly three decades, the
dollar's performance in recent months has been closely correlated to swings in risk
That is because although the U.S. central bank has kept on track in raising interest
rates, broader financial conditions remained loose.
"In any case, we continue to expect healthy economic growth and positive returns for
risky assets, so the dollar’s flight-to-quality attributes should not be a central driver
for the time being," Goldman Sachs strategists Zach Pandl and Lorenzo Incoronato wrote in a
research note.
In a wider measure of dollar positioning that includes net contracts on
the New Zealand dollar, Mexican peso, Brazilian real and Russian ruble, the greenback
posted its biggest net short position since August 2011.
The U.S. Treasury semi-annual report released late on Friday did not jolt the currency
markets, with the Trump administration again refraining from naming any major trading
partners as currency manipulators as it pursues potential tariffs and negotiations to try
to cut a massive trade deficit with China.
Sterling was an exception. It gained 0.6 percent, rising above $1.43 for the
first time since January as investors focused on data that could help shore up expectations
of a May interest rate hike.
Currency bid prices at 1432 EDT (1832 GMT):
Description RIC Last U.S. Close Pct YTD Pct High Bid Low Bid
Previous Change Change
Euro/Dollar $1.2377 $1.2329 +0.39 +3.18 +1.2394 +1.2325
Dollar/Yen 107.0500 107.3300 -0.26 -4.99 +107.6100 +107.0400
Euro/Yen 132.52 132.34 +0.14 -1.97 +132.9600 +132.1200
Dollar/Swiss 0.9597 0.9622 -0.26 -1.50 +0.9637 +0.9579
Sterling/Dollar 1.4324 1.4239 +0.60 +6.01 +1.4337 +1.4228
Dollar/Canadian 1.2571 1.2610 -0.31 -0.05 +1.2623 +1.2567
Australian/Doll 0.7779 0.7766 +0.17 -0.28 +0.7783 +0.7753
Euro/Swiss 1.1880 1.1862 +0.15 +1.63 +1.1884 +1.1861
Euro/Sterling 0.8641 0.8659 -0.21 -2.72 +0.8669 +0.8627
NZ Dollar/Dolar 0.7360 0.7357 +0.04 +3.87 +0.7371 +0.7334
Dollar/Norway 7.7767 7.7724 +0.06 -5.24 +7.7931 +7.7486
Euro/Norway 9.6249 9.5904 +0.36 -2.27 +9.6356 +9.5814
Dollar/Sweden 8.4143 8.4722 -0.28 +2.59 +8.4866 +8.3970
Euro/Sweden 10.4166 10.4457 -0.28 +5.87 +10.4699 +10.3970

(Additional reporting by Saikat Chatterjee in LONDON,
Shinichi Saoshiro in TOKYO;
Editing by Susan Thomas and Dan Grebler)

First Published: 2018-04-16 02:29:58
Updated 2018-04-16 20:48:59

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