Sun, Jun 11, 2017 - Page 14 News List

US dollar gains as sterling plummets on election shock

Reuters, NEW YORK

The US dollar rose against a basket of currencies on Friday, helped by a sharp drop in the British pound after UK Prime Minister Theresa May’s Conservative Party lost its parliamentary majority in national elections.

The US dollar index, which tracks the greenback against six major rivals, was up 0.37 percent at 97.273, after rising to a 10-day high of 97.5 earlier in the session. It is up 0.6 percent from last week’s 96.725.

The index had fallen to a seven-month low mid-week on caution ahead of US Senate testimony by former FBI director James Comey and the British election.

However, on Friday, it added to gains from the previous session.

Comey on Thursday accused US President Donald Trump of firing him to try to undermine the bureau’s investigation of possible collusion between his presidential campaign team and Russia, but did not say whether he thought the US president sought to obstruct justice.

“Comey’s testimony was pretty much a non-event for the markets. I think it was more of a relief [for the US dollar] than anything else,” said Sireen Harajli, foreign-exchange strategist at Mizuho Securities USA Inc in New York.

In Taipei, the New Taiwan dollar on Friday fell against the US dollar, losing NT$0.003 to close at NT$30.108 in a quiet session that offered few clear leads to guide traders, dealers said.

The NT dollar gained 0.06 percent versus the US dollar from last week’s NT$30.127.

The euro was down 0.14 percent to US$1.1196 against the US dollar, a day after the European Central Bank closed the door on more interest rate cuts.

The common currency is down 0.7 against the greenback from last week’s US$1.1276.

“The overall sentiment is that regardless of what is going on elsewhere, the US is a safe haven for investors and traders,” said Minh Trang, senior currency trader at Silicon Valley Bank in Santa Clara, California.

Traders would turn their attention to next week’s US Federal Reserve policy meeting, where the central bank is widely expected to deliver this year’s second rate hike, Harajli said.

The British pound tumbled after an election that denied any party a majority in parliament and fomented a sense of political chaos just days before Brexit talks begin.

The pound fell as much as 2.5 percent to US$1.2635 in early European trade, its lowest level since May called the election on April 18, before recovering some ground to trade down 1.8 percent to US$1.2718. It is down 1.3 percent against the US dollar from last week’s US$1.2891.

The US dollar on Friday rose 0.2 percent against the yen to ¥110.26, but is down 0.2 percent for the week.

The Canadian dollar rose against its US counterpart as strong domestic jobs data supported the view that the Bank of Canada will raise interest rates earlier than previously thought.

Meanwhile, Mexico’s peso reached an almost 10-month high, clawing its way back to levels last seen before the election of Trump as US president, as higher oil prices helped lift emerging market currencies.

Additional reporting by CNA

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