Forex - Dollar Steady but Geopolitical Tensions Limit Gains

11 April 2018, 08: 19
© Reuters.  Dollar steady but geopolitical tensions limit gains© Reuters. Dollar steady but geopolitical tensions limit gains

The dollar was steady against a basket of the other major currencies on Thursday, but struggled to make headway as concerns over the prospect of a U.S. military strike in Syria rattled markets.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was little changed at 89.26 by 03:25 AM ET (07:25 GMT), holding above Wednesday’s two week lows of 89.04.

After a Russian diplomat said his country’s forces would shoot down U.S. missiles launched at Syria, U.S. President Donald Trump warned Russia to "get ready” for imminent military action in response to an alleged chemical attack over the weekend.

Trump’s comments raised the prospect of direct military conflict between the U.S. and Russia in Syria, escalating tensions in the Middle East.

The dollar was steady against the yen, with USD/JPY last at 106.85. The safe haven yen is often sought out by investors in time of market turmoil and political tensions.

Rising geopolitical tensions pulled focus away from fears over a U.S.-China trade war, which had gripped global financial markets in recent weeks.

The dollar failed to find much support from Wednesday’s Federal Reserve minutes with investors focused on Syria tensions.

The minutes of the Fed’s March meeting showed that officials believe that while the economy will continue to firm and that inflation will rise in the coming months they remained wary about the impact of the Trump administration's trade and fiscal policies.

The euro was little changed, with EUR/USD last at 1.2369.

Demand for the single currency continued to be underpinned after comments by European Central Bank policymakers earlier this week underlined expectations that the bank is on track to normalize monetary policy.

The pound was steady against the U.S. currency, with GBP/USD trading at 1.4184.