FOREX-Dollar holds firm as stocks slip worldwide

Mon Jul 21, 2014 3:12pm EDT

Related Topics

* Euro rebounds from five-month low vs dollar, above $1.35

* Major Wall Street stock indexes pare initial losses

* Trading volume muted on Japanese holiday (Update market action)

By Richard Leong

NEW YORK, July 21 (Reuters) - The U.S. dollar held steady against major currencies on Monday as investors reduced holdings of stocks and other risky assets on anxiety about escalating violence in Gaza and Ukraine.

Demand for traditional safe-haven yen and Swiss francs persisted but was not strong enough to push them out of recent trading ranges against the dollar, as traders have been assessing whether the fighting in these regions would affect the global economy, analysts said.

Volumes were light due to a holiday in Japan.

"There doesn't seem to be a bearish sentiment on the real economy yet," said Sebastien Galy, currency strategist at Societe Generale in New York.

The dollar index edged up 0.03 percent at 80.555 after hitting a four-week high last Friday.

The greenback was little changed against the yen at 101.36 yen with benchmark Treasury yields hovering at their lowest in over seven weeks. The dollar slipped 0.1 percent against the Swiss franc, last trading at 0.8978 franc.

The euro recovered against the dollar despite a sell-off in European shares. It traded steady at $1.3523, well above Friday's five-month low of $1.3491. Support is seen at $1.3460/80, an area that has provided a floor on several occasions in the past 10 months or so.

"There might be a temptation for the market to probe those lower levels," Galy said.

Wall Street shares were weaker but managed to pare initial losses. The Standard & Poor's 500 index was down 0.2 percent after falling as much 0.6 percent earlier.

The MSCI world stock index slipped 0.2 percent on the day.

Lower U.S. yields kept a lid on the dollar as some traders favored lower-risk government bonds over stocks. The yield on benchmark 10-year notes dipped 1 basis point to 2.47 percent, near a seven-week low set last week. (Additional reporting by Anirban Nag in London and Ian Chua in Sydney; Editing by James Dalgleish)

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