June 5, 2018 / 2:23 PM / 10 months ago

FOREX-Dollar firms as trade war fears stoke selling in emerging currencies

    * Mexican peso, Canadian dollar lead losers on trade war
    * Mexico says will slap tariffs on U.S. pork imports
    * U.S. ISM non-manufacturing index rises in May
    * Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh

 (Adds new comment, FX table, update prices, changes byline;
dateline; previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, June 5 (Reuters) - The dollar rose on Tuesday,
edging toward a six-month high hit last week, as the latest
development in a growing trade conflict between the U.S. and its
commercial partners prompted selling in emerging market
    The Mexican peso and Canadian dollar posted
the biggest losses against the U.S. dollar as trade war concerns
rose. Other emerging market currencies also fell in tandem with
the peso such as the South African rand. 
    The U.S. dollar, on the other hand, remained supported by a
brighter economic outlook that has made an interest rate hike by
the Federal Reserve next week a near-certainty.
    "The story of U.S. data outperforming data around the world,
especially in Europe, the UK, and Japan remains intact for now,"
said Brad Bechtel, managing director, at Jefferies in New York.
    But he noted that external factors that have influenced the
dollar such as the Italian political crisis and trade tariffs
have already built into the currency price. 
    "The U.S. dollar is going to be a bit rangebound for now
with a firm undertone," said Bechtel.
    In mid-morning trading, the dollar climbed 0.3 percent to
94.28 against a currency basket. It hit 95.02 last week,
its highest since early November and has risen nearly six
percent since mid-April.
    The dollar got a bit of boost after a U.S. service sector
index as measured by the Institute for Supply Management rose
more than expected in May to 58.6.
    The Mexican peso, meanwhile, fell to a more than one-year
low against the dollar, which was last up 1.6 percent at 20.3968
pesos. Against the Canadian dollar, the U.S. currency rose 1.0 
percent to C$1.3060.
    Mexico said it will impose a 20-percent tariff on U.S. pork
imports after U.S. President Donald Trump slapped tariffs on
steel and aluminium.
    The tariff was in response to the Trump administration's
decision last week to impose steel and aluminum tariffs on
Mexican exporters on grounds that countries including Mexico
engage in competition damaging to U.S. national security.
    The dollar's strength was also helped by the euro's
lingering weakness with latest headlines offering little
evidence Italy would stick to a path of fiscal restraint.
    Bond yields rose on Tuesday, after new Italian Prime
Minister Guiseppe Conte promised to bring radical change as he
sought parliamentary backing for an anti-establishment
    The euro fell 0.3 percent against the dollar to

    Currency bid prices at 10:11AM (1411 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1663        $1.1698     -0.30%         -2.78%      +1.1716     +1.1654
 Dollar/Yen       JPY=        109.8300       109.8000    +0.03%         -2.52%      +110.0000   +109.6100
 Euro/Yen         EURJPY=     128.11         128.45      -0.26%         -5.23%      +128.7000   +127.8000
 Dollar/Swiss     CHF=        0.9883         0.9876      +0.07%         +1.44%      +0.9894     +0.9853
 Sterling/Dollar  GBP=        1.3342         1.3311      +0.23%         -1.26%      +1.3392     +1.3303
 Dollar/Canadian  CAD=        1.3057         1.2927      +1.01%         +3.82%      +1.3067     +1.2914
 Australian/Doll  AUD=        0.7599         0.7643      -0.58%         -2.59%      +0.7656     +0.7595
 Euro/Swiss       EURCHF=     1.1528         1.1556      -0.24%         -1.38%      +1.1563     +1.1510
 Euro/Sterling    EURGBP=     0.8741         0.8787      -0.52%         -1.60%      +0.8791     +0.8724
 NZ               NZD=        0.7001         0.7027      -0.37%         -1.20%      +0.7044     +0.6999
 Dollar/Norway    NOK=        8.1443         8.1162      +0.35%         -0.76%      +8.1523     +8.0927
 Euro/Norway      EURNOK=     9.5010         9.4972      +0.04%         -3.53%      +9.5195     +9.4731
 Dollar/Sweden    SEK=        8.7825         8.7560      -0.02%         +7.08%      +8.7953     +8.7330
 Euro/Sweden      EURSEK=     10.2444        10.2460     -0.02%         +4.12%      +10.2610    +10.2138
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Saikat Chatterjee in London; Editing by Cynthia Osterman)
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