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FOREX -Dollar rises broadly on expectations of positive U.S. data
August 29, 2013 / 11:53 AM / 4 years ago

FOREX -Dollar rises broadly on expectations of positive U.S. data

* US GDP and initial claims data could push dollar higher
    * Dollar rises vs yen as Syria tension eases
    * Emerging FX relief seen supporting case for Fed taper

    By Anooja Debnath
    LONDON, Aug 29 (Reuters) - The dollar rose broadly on
Thursday as some investors positioned for strong U.S. data and
tensions surrounding Syria eased slightly, helping to push U.S.
Treasury yields higher.
    Strategists said encouraging U.S. growth and jobless claims
data would reaffirm expectations the Federal Reserve will scale
back its stimulus in coming months. 
    Market sentiment was still cautious, but prospects of an
imminent Western attack on Syria weakened, given opposition in
Britain and among U.S. lawmakers. 
    U.S. Treasury yields, which fell in recent days
as investors sought refuge in low-risk government debt, rose,
increasing the dollar's appeal.   
    The dollar was up 0.5 percent against a basket of
currencies at 81.850. Against the safe-haven yen it was up 0.6
percent at 98.17 yen, recovering from Wednesday's trough
of 96.81 yen, which was its lowest since August 12. 
    "The dollar has been supported mainly due to expectations
that the U.S. GDP figures will be better than the previous
release," said Ulrich Leuchtmann, head of FX research at
Commerzbank. "Part of the reason is Syria and emerging market
events but it is more about the U.S. data right now."
    Some said reduced tension in emerging markets also supported
the U.S. currency as it reinforced bets the Fed would taper
monetary stimulus soon. 
    "A slight easing of the tensions in Syria and emerging
markets, has helped the dollar," said Simon Derrick head of
currency research at Bank of New York Mellon.
    "Over the last few weeks tensions in emerging markets were
seen as keeping pressure on the Fed to delay tapering which is
dollar negative. With emerging markets now doing a little
better, the dollar is higher."
    Analysts at Morgan Stanley expect the dollar to regain
support against major currencies "as risk aversion eases,
allowing some stabilisation in risky asset markets and
potentially providing some relief to emerging currencies."
    First hit by outflows of funds as investors braced for an
eventual end of Fed stimulus, emerging market pain had been
exacerbated as the crisis in Syria made investors even more
risk-averse.
    Against the buoyant dollar, the euro was down 0.6
percent at $1.3259.
    While a debt auction in Italy was relatively successful,
borrowing costs for a new five-year bond rose as investors
remained wary over the coalition government's stability, which
weighed on the euro. 
    The euro's recent resilience is likely running out of steam,
according to the options market.

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