Gulf Crisis: Dollar tumbles to seven-month low

Illustration photo of U.S. Dollar and Japan Yen notes

Asian stocks, oil and the dollar falls on Tuesday after rising tensions in the Middle East, the impending testimony of the former FBI director, British elections and a European Central Bank meeting this week.

The dollar index touched a seven-month low ahead of testimony before Congress from former FBI director James Comey today.

Stocks in Qatar plunged more than 8 percent overnight to their lowest since January 2016. U.S. crude CLc1 was 0.6 percent lower at $47.12 a barrel on Tuesday, after falling 0.55 percent on Monday.

Global benchmark Brent LCOc1 retreated 0.6 percent to $49.17, extending Monday’s 1 percent slide.

The dollar index, which tracks the greenback against a basket of trade-weighted peers, fell to its lowest level since the November U.S. election and was last down 0.2 percent at 96.623.

The dollar slid 0.6 percent to 109.85 yen on Tuesday, close to the six-week low hit earlier in the session.

News on Monday of U.S. services sector activity slowing in May as new orders tumbled also hit the dollar.

The dollar also came under pressure from a stronger euro, on expectations the European Central Bank will take a less dovish tone at its Thursday meeting. The ECB may even discuss dropping some of its pledges to ramp up stimulus if needed, four sources with direct knowledge of the discussions told Reuters last week.

The common currency was 0.1 percent higher at $1.127 on Tuesday. Sterling advanced 0.1 percent to $1.292.

MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.2 percent, pulling back from a two-year high hit on Monday. Japan’s Nikkei dropped 0.5 percent, tripped by a stronger yen.

Australian shares tumbled 1.1 percent, while the Australian dollar slipped 0.2 percent to $0.7471 after the current account deficit narrowed to its smallest in more than 15 years last quarter but still disappointed investors who had hoped for a surplus.

Investors are awaiting the Reserve Bank of Australia policy decision later on Tuesday, when its benchmark rate is expected to be held at a record low 1.5 percent.

Chinese shares and Hong Kong shares bucked the trend, rising 0.1 percent and 0.3 percent respectively.

Overnight, Wall Street indexes slipped between 0.1 percent and 0.2 percent, with Apple Inc. leading losses on the Dow Jones Industrial Average

Tokyo Branch Manager of State Street Bank Bart Wakabayashi said that the dollar is already on the defensive after Friday’s jobs data, and now it’s facing potential geopolitical risk in the form of Comey’s testimony.

Source : Reuters


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