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FOREX-Dollar supported by safety flows; euro at new 2-year low

Published 27/09/2019, 02:16
FOREX-Dollar supported by safety flows; euro at new 2-year low
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* Dollar finds broad safe-haven support

* Greenback near multi-week highs versus most major

currencies

* Euro hits fresh two-year low

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Tom Westbrook

SINGAPORE, Sept 27 (Reuters) - The dollar stood tall on

Friday, holding near multi-week highs against most major

currencies as heightened risks from political tensions to the

Sino-U.S. trade war increased its safe-haven lustre.

In Asian trade it was steady around 107.75 yen JPY= , near

a one-week peak, and edged higher against the euro EUR= to

$1.0916. The single currency slipped to a fresh two-year low

pressured by an increasingly weak outlook for the euro zone.

The greenback also steadied against the Australian dollar,

near its strongest in three weeks, while it regained some ground

handed to the New Zealand dollar on Thursday.

"The positive U.S. dollar trend, with lots of noise in

between it, remains intact," said Westpac analyst Imre Speizer

in Auckland.

He added that risk aversion driven by trade war fears, a

resilient U.S. economy and increasingly

less-dovish-than-expected language from U.S. Federal Reserve

board members were supporting the greenback.

"There's a bit of political risk thrown in there as well via

the Middle East and Brexit," he said.

The pound wallowed at $1.2325, close to a two-week low hit

on Thursday after the European Union's Brexit negotiator said

Britain had yet to provide "legal and operational" proposals for

an agreement on exiting the bloc. Broader sentiment was fickle across markets. Positive

comments from the Chinese commerce ministry on progress in trade

negotiations had rallied European stocks overnight. [nL3N26H297

Richmond Federal Reserve President Thomas I. Barkin said the

U.S. economy looked strong and it was too early to tell whether

further rate cuts were needed. But a Bloomberg report that said the United States was

unlikely to extend a waiver over Huawei Technologies' blacklist

weighed on U.S. equities.

Markets are also digesting the impeachment probe launched

into U.S. President Donald Trump, who went on the offensive as

investors increasingly view the inquiry as a long-term drag

rather than a short-term risk. The opening of the probe on Wednesday had initially knocked

the dollar, but it soon recovered and surged.

The dollar index .DXY , which measures the greenback

against a basket of other currencies, rose overnight to its

highest since Sept. 3 and held near that mark on Friday at

99.215.

"It seems that when push comes to shove, the USD remains the

safest place to be at the moment," said Rodrigo Catril, senior

FX analyst at National Australia Bank in Sydney.

"In addition to its prime reserve currency status, the

greenback is still benefiting from a yield supremacy and a U.S.

economy that is still performing relatively well."

Elsewhere, the Australian dollar AUD=D3 was firmer at

$0.6754, but only marginally as traders wait for a central bank

meeting next Tuesday where the Reserve Bank of Australia is

widely expected to cut interest rates. The New Zealand dollar NZD=D3 surrendered some of its

gains won on Thursday, when Reserve Bank of New Zealand Governor

Adrian Orr was circumspect about the prospect of further

monetary easing to steady at $0.6295. The Chinese yuan CNH= eased in offshore trade to 7.1300

per dollar.

(Editing by Jacqueline Wong)

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