March 23, 2018 / 3:20 PM / 10 months ago

FOREX-Dollar weakens, near one-month low, on trade war tensions

    * Dollar index on pace for worst weekly decline in five
    * Japanese yen, Swiss franc big gainers for week

 (Updates throughout on U.S. market open, changes dateline;
previous LONDON)
    By Saqib Iqbal Ahmed
    NEW YORK, March 23 (Reuters) - The dollar hovered near a
one-month low against a basket of major currencies on Friday and
was on course for its biggest weekly drop in five as investors
worried that escalating trade tensions could hurt global growth.
    The dollar index, which measures the greenback
against a basket of six other major currencies, was down 0.3
percent at 89.585. For the week, the index was down 0.7 percent.
    China urged the United States on Friday to "pull back from
the brink" as President Donald Trump's plans for tariffs on up
to $60 billion in Chinese goods moved the world's two largest
economies closer to a trade war.
    "People seem to be being just a little cautious with so many
headlines coming out, and wondering what the next headline could
be and how the market is going to react to it," said Chuck
Tomes, senior investment analyst at Manulife Asset Management in
    Expectations about shifting policy at global central banks
was also injecting an element of uncertainty into currency
markets, Tomes said.
    Trump's decision on Thursday to replace H.R. McMaster as
national security adviser with John Bolton, a hawk who has
advocated using military force against North Korea and Iran,
could also be weighing on sentiment on the margins, Tomes said.

    "Because it is coming in conjunction with all the other
things at this moment in time, people might have a little bit
more of a reaction," he said.
    A gauge of stress in the U.S. money markets climbed to its
highest level in nearly nine years on Friday on concerns about
growing costs for banks and other companies to borrow dollars
and further interest rate increases from the Federal Reserve.
    The gap between the three-month dollar London interbank
offered rate and three-month overnight indexed swap
rate expanded to 58 basis points, the widest since
May 2009, according to Thomson Reuters data.
    The yen, often viewed as a safe-haven currency in times of
market turbulence and economic uncertainty, partly because of
the resilience provided by Japan's current account surplus, rose
to a 16-month high against the dollar.
    The greenback was down 0.1 percent at 105.15 yen.
    The dollar also slipped 0.06 percent against the Swiss franc
, another currency bought in times of market uncertainty.
    Sterling was up 0.47 percent after Bank of England
rate-setter Gertjan Vlieghe said that interest rates will
probably need to rise once or twice a year over the next few
years, comments that are likely to help cement investors'
expectations of a BoE rate hike in May.
    The Canadian dollar rose against the greenback as oil
prices rose and hotter-than-expected domestic inflation data
raised the chances of a further Bank of Canada interest rate
hike over the coming months.
    Currency bid prices at 11:00AM (1500 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.2334        $1.2300     +0.28%         +0.00%      +1.2360     +1.2302
 Dollar/Yen       JPY=        105.1600       105.2600    -0.10%         +0.00%      +105.3400   +104.6600
 Euro/Yen         EURJPY=     129.70         129.50      +0.15%         +0.00%      +129.9700   +128.9700
 Dollar/Swiss     CHF=        0.9485         0.9490      -0.05%         +0.00%      +0.9495     +0.9445
 Sterling/Dollar  GBP=        1.4160         1.4094      +0.47%         +0.00%      +1.4171     +1.4085
 Dollar/Canadian  CAD=        1.2849         1.2938      -0.69%         +0.00%      +1.2940     +1.2825
 Australian/Doll  AUD=        0.7731         0.7691      +0.52%         +0.00%      +0.7743     +0.7688
 Euro/Swiss       EURCHF=     1.1700         1.1677      +0.20%         +0.00%      +1.1706     +1.1654
 Euro/Sterling    EURGBP=     0.8709         0.8725      -0.18%         +0.00%      +0.8754     +0.8710
 NZ Dollar/Dolar  NZD=        0.7255         0.7204      +0.71%         +0.00%      +0.7265     +0.7203
 Dollar/Norway    NOK=        7.7420         7.7489      -0.09%         +0.00%      +7.7909     +7.7284
 Euro/Norway      EURNOK=     9.5524         9.5361      +0.17%         +0.00%      +9.6021     +9.5276
 Dollar/Sweden    SEK=        8.2461         8.2550      +0.15%         +0.00%      +8.2845     +8.2314
 Euro/Sweden      EURSEK=     10.1710        10.1562     +0.15%         +0.00%      +10.2135    +10.1382
 (Additional reporting by Saikat Chatterjee in LONDON
Editing by Susan Thomas)
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