June 4, 2018 / 7:51 PM / 2 months ago

FOREX-Dollar slides to 2-week low on trade concerns, easing Italy risks

    * Euro breaches $1.17 as Italy risks ease, risk sentiment up
    * Dollar down despite Friday's strong U.S. jobs report
    * Australian dollar has biggest one-day gain since August
    * Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh

 (Adds new comment, updates prices in text, table)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, June 4 (Reuters) - The dollar dropped to a
two-week low on Monday, as easing political tensions in Italy
lifted the euro and global trade concerns resurfaced after China
warned the United States against tariffs and other protectionist
measures.
    "With European political drama retreating from the brink,
the peak in the dollar index was likely observed at 95," said
Mazen Issa, senior FX strategist at TD Securities in New York.
    Lingering trade disputes will also contribute to a
challenging backdrop for the U.S. dollar in the weeks ahead, he
added.
    "The U.S. administration appears uncoordinated and
unprepared with a global effort - that now includes China -
throwing its hat in the ring of retaliation and withdrawal of a
principled agreement to buy more U.S. goods should the U.S.
decide to go through with purported tariffs later this month,"
Issa said.
    The official Chinese news agency Xinhua reported on Sunday
that if the United States introduces trade sanctions including
raising tariffs, all the economic and trade achievements
negotiated by the two parties a few weeks ago will be void.

    In late trading, the dollar index fell 0.2 percent to 94.046
, hitting a two-week trough of 93.664.
    The dollar fell on Friday despite a strong U.S. non-farm
payrolls report, suggesting the greenback has looked stretched
after gaining consistently since mid-April.
    Kathy Lien, managing director of FX strategy at BK Asset
Management in New York, said even though the dollar is looking
exhausted, it could be bracing for one more push higher ahead of
this month's Federal Reserve monetary policy meeting. 
    Better-than-expected U.S. jobs data last week underlined the
strength of the U.S. economy and the near-certainty of a Fed
interest rate rise this month and probably a fourth hike this
year, factors which have lifted the dollar.
    "Unless something challenges that outlook, investors will be
holding onto their dollars into the FOMC (Federal Open Market
Committee) meeting," BK's Lien said.
    The euro, meanwhile, clawed back some gains as Italy took
steps to form a new government and as German Chancellor Angela
Merkel said over the weekend that Germany favored moves toward a
European Monetary Fund.
    In late trading, the euro was up 0.3 percent at $1.1694,
after rising as high as $1.1737, its highest level since
May 24, pulling further away from 2018 lows of $1.151 last week.
    The Australian dollar surged to its highest level since
April on an improvement in broader risk sentiment and domestic
data showing strong corporate profits and a rise in retail
sales. 
    The Aussie was last up 1 percent at US$0.7650,
posting its biggest one day-rise since August.
    
    ========================================================
    Currency bid prices at 3:41PM (1941 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1693        $1.1660     +0.28%         -2.53%      +1.1744     +1.1653
 Dollar/Yen       JPY=        109.7800       109.5300    +0.23%         -2.57%      +109.7900   +109.3800
 Euro/Yen         EURJPY=     128.40         127.69      +0.56%         -5.02%      +128.6800   +127.5900
 Dollar/Swiss     CHF=        0.9882         0.9880      +0.02%         +1.43%      +0.9894     +0.9831
 Sterling/Dollar  GBP=        1.3310         1.3347      -0.28%         -1.50%      +1.3399     +1.3296
 Dollar/Canadian  CAD=        1.2932         1.2947      -0.12%         +2.82%      +1.2964     +1.2900
 Australian/Doll  AUD=        0.7647         0.7566      +1.07%         -1.97%      +0.7666     +0.7557
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1557         1.1515      +0.36%         -1.13%      +1.1564     +1.1523
 Euro/Sterling    EURGBP=     0.8782         0.8738      +0.50%         -1.10%      +0.8786     +0.8733
 NZ Dollar/Dolar  NZD=        0.7027         0.6981      +0.66%         -0.83%      +0.7048     +0.6978
 Dollar/Norway    NOK=        8.1169         8.1805      -0.78%         -1.10%      +8.1942     +8.0920
 Euro/Norway      EURNOK=     9.4931         9.5417      -0.51%         -3.61%      +9.5504     +9.4908
 Dollar/Sweden    SEK=        8.7559         8.8238      -0.51%         +6.76%      +8.8285     +8.7353
 Euro/Sweden      EURSEK=     10.2390        10.2920     -0.51%         +4.07%      +10.2953    +10.2357
 
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by David
Gregorio and Paul Simao)
  
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