* Dollar index hits a nearly 3-week low at 99.799
* Sterling soars on UK govt call for June 8 election
(Updates with U.S. market open; changes dateline; previous
By Fergal Smith
NEW YORK, April 18 The dollar dropped to a
nearly three-week low against a basket of major currencies on
Tuesday, pressured by lower Treasury yields, while sterling
soared after Prime Minister Theresa May called for an early
U.S. Treasury yields fell as nervousness ahead of France’s
first round of presidential elections this weekend and ongoing
geopolitical tensions boosted demand for safe-haven U.S. debt.
"We still think the dollar is going to strengthen over time
based on the outlook for U.S. monetary policy... but for now,
with markets not heavily focused on monetary policy, it could
explain this consolidation (for the greenback)," said Eric
Viloria, currency strategist at Wells Fargo.
The U.S. dollar index lost 0.45 percent to 99.842. It
touched its lowest since March 29 at 99.799.
Concerns about North Korea and the French presidential
elections also kept a lid on the dollar against the yen -
traditionally a haven for capital in times of political and
economic stress - which has surged in the past two weeks.
Investors are watching ongoing U.S.-Japan economic talks for
signs of the direction U.S. trade policy could take under
President Donald Trump, who campaigned on a protectionist
platform and has complained of countries artificially weakening
The dollar gained overnight against the yen on comments by
U.S. Treasury Secretary Steven Mnuchin that were seen favoring
long-term dollar strength. But it turned lower to trade down
0.16 percent at 108.73 yen.
Sterling surged to its highest level since early December,
up 1.5 percent at $1.2753 after May made a surprise call for an
early general election to be held on June 8.
Analysts said markets were taking the move as a positive as
polls show May likely to win the election, and a victory could
strengthen her party's majority in government ahead of Brexit
"That could reduce some of the political noise," said Wells
The euro was 0.5 percent higher at $1.0695, having
moved little on Monday, when many European markets were shut for
the Easter holiday.
Weaker prices for iron ore continued to weigh on the
Australian dollar, which fell 0.6 percent to $0.7539 after
rising to a two-week high on Monday above $0.7600 on upbeat
Chinese growth data.
(Additional reporting by Saqib Iqbal Ahmed; Editing by Dan