May 19, 2017 / 2:49 PM / 2 years ago

FOREX-Dollar heads for worst week in over a year amid political uncertainty

* Dollar index poised for weekly loss of 2 percent

* Euro hits 6-month high (Updates to U.S. market open, adds data, quote, changes dateline, previous LONDON)

By Dion Rabouin

NEW YORK, May 19 (Reuters) - The U.S. dollar was poised on Friday for its worst week since April 2016 against a basket of major currencies, having given up much of the gains made since Donald Trump was elected U.S. president.

The dollar index, which tracks the greenback against a basket of six world currencies, has shed around 2 percent this week. On Friday, it fell 0.6 percent, hitting its lowest since Nov. 9, the day of the U.S. election results.

Uproar over Trump’s recent firing of FBI director, James Comey, who was overseeing an investigation into possible links between the president’s team and Russia, have pressured the dollar.

“The dollar overall, across the board, has been getting beat up this week and a lot of that has to do with the political risk here in DC,” said John Doyle, director of markets at Tempus Inc in Washington. “While we saw a little bit of a reprieve yesterday, we’re right back on that dollar weakness train.”

The U.S. currency has also suffered from a resurgent euro, which has gained more than 2 percent this week and was on track for its best performance since February 2016. It rose 0.8 percent on Friday to hit a six-month high of $1.1196.

That advance of the euro, said analysts, was spurred by a possible winding back of the European Central Bank’s expansive monetary stimulus program, with data pointing to a robust recovery in the euro zone.

“Now that the French election is out of the way, political risk has fallen in Europe, and markets are refocusing on monetary policy, where the focus is on imminent tightening from the ECB,” said Commerzbank currency strategist Thu Lan Nguyen, in Frankfurt.

Against the safe-haven Swiss franc, the dollar fell 0.45 percent, touching a fresh 6-month low. It was on track for its largest weekly percentage fall since February 2016.

The dollar edged up against the yen to 111.57 but remained on track for its first weekly fall in five.

The greenback sank against emerging market currencies, which were dragged lower on Thursday by news that Brazilian President Michel Temer had been recorded offering bribes to silence testimony by a potential witness in the country’s wide-ranging corruption probe.

The dollar fell 2.5 percent against the Brazilian real .

Oil-linked emerging market currencies like the Mexican and Colombian pesos and the Russian rouble gained around 1 percent versus the dollar, also boosted by a rise in oil prices, which were headed for their second straight weekly gain. (Additional reporting by Jemima Kelly in London; Editing by Bernadette Baum)

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