Dollar strengthens as North Korea, Syria tensions loom

Cristiano Ronaldo vs North Korea in Football!

The dollar strengthened on Monday, benefiting from a rush to safety as investors worried about a tightening presidential race in France and simmering geopolitical tensions between the U.S., Syria and North Korea.

One euro EURUSD, +0.1228% bought $1.0578 in recent trade, its weakest level against the greenback in more than a month. By comparison, it traded at $1.0591 late Friday in New York. The ICE U.S. Dollar index DXY, -0.26% a measure of the bucks strength against a basket of rivals, traded up 0.1% at 101.2700. One dollar USDJPY, -0.14% traded for 111.35, compared with 111.10 late Friday. One pound GBPUSD, +0.2584% traded at $1.2401, compared with $1.2373 late Friday.

A poll released over the weekend showed far-left candidate Jean-Luc Melenchon virtually neck-and-neck with embattled Republican candidate Franois Fillon, transforming Frances presidential contest into a four-way race less than two weeks before the first round of voting. European stocks tumbled on the news and the yield spread between French and German 10-year bonds touched its widest level since February.

Last week, President Donald Trump launched 59 Tomahawk missiles at a Syrian air base in retaliation for a chemical weapons attacked that killed more than 100 civilians. Now, investors are wondering if the U.S. might consider a similar strike against north korea in an attempt to check its nuclear ambitions. Over the weekend, the U.S. rerouted an aircraft carrier and several other warships to the Korean Peninsula in a show of force.

Simmering geopolitical tensions tend to benefit the greenback as investors seek safety by moving their money to the most stable G-10 markets, said Joe Manimbo, senior market analyst at Western Union Business Solutions.

The current themes out there are generally dollar-positive, Manimbo said. I would suspect with the Easter holidays approaching investors are likely to stay close to safe haven plays.

Investors are looking ahead to remarks from Federal Reserve Chairwoman Janet Yellen, who is set to speak publicly at 4 p.m. Theyll be looking to hear more about the Feds plans for unwinding its $4.5 trillion balance sheet after New York Fed President William Dudley on Friday reiterated his view that the central bank will briefly suspend its plans for raising interest rates when it begins trimming its holdings later this year.

Beyond that, the next big events for markets arent expected until later in the week, when a series of economic reports will provide insight into the strength of the American consumer. Those reports are the University of Michigans consumer-sentiment survey, expected Thursday, and the U.S. Census Bureaus latest reading on retail sales, expected Friday.

In the emerging-market space, the South African rand slid to its weakest level against the dollar in three months as the currency continued to suffer after Fitch and Standard & Poors cut the countrys credit rating into junk territory last week. One dollar USDZAR, +1.0401% bought 13.88 rand, compared with 13.77 rand late Friday.

Source: http://www.marketwatch.com/story/dollar-strengthens-as-north-korea-syria-tensions-loom-2017-04-10