April 16, 2018 / 2:33 PM / in 4 months

FOREX-Dollar falls with reduced anxiety about Syria

    * Traders hope for limited military strike against Syria
seen 
    * Investors brush off U.S. retail sales rebound in March 
    * U.S. Treasury report fails to surprise currency markets

 (Updates market action, changes dateline, previous LONDON)
    By Richard Leong
    NEW YORK, April 16 (Reuters) - The dollar fell broadly on
Monday on hopes that a U.S.-led strike on Syria would not
escalate, rekindling some appetite for stocks and other risky
assets and spurred investors to reduce safe-haven holdings of
the greenback.
    Government data that showed a rebound in U.S. store sales in
March failed to lift the dollar which has been pressured by
concerns over a trade war between the United States and China,
the world's two biggest economies.
    "The action may be more limited than previously thought and
that's helped market sentiment," said Eric Viloria, currency
strategist at Wells Fargo Securities in Stamford, Connecticut,
said of a missile strike against Syria.
    The U.S., Britain and France said their bombing was aimed at
three chemical weapons facilities in retaliation for a suspected
poison gas attack in Douma by the Assad regime.
    For now, the three Western nations signaled there will be no
more strikes.
    "The military strikes were well telegraphed and we are
seeing a continuation in the broad market theme from last week
of a weaker dollar and favorable conditions for risk taking,"
said Credit Agricole currency strategist Manuel Oliveri in
London.
    The MSCI world equity index, which tracks
shares in 45 nations, rose 0.18 percent, to 511.45.
    An index that tracks the dollar against a basket of six
currencies fell 0.42 percent, to 89.426. The dollar index
hit a two-week low of 89.355 last week.       
    Despite widening interest rate differentials in its favor
and the widest yield gap between two-year U.S. and German debt
for nearly three decades, the dollar's performance in recent
months has been closely correlated to swings in risk appetite.
    That is because although the U.S. central bank has kept on
track in raising interest rates, broader financial conditions
remained loose.  
    In a wider measure of dollar positioning that
includes net contracts on the New Zealand dollar, Mexican peso,
Brazilian real and Russian rouble, the greenback posted its
biggest net short position since August 2011.
    The U.S. Treasury semi-annual report released late Friday
did not jolt the currency markets, with the Trump administration
again refraining from naming any major trading partners as
currency manipulators as it pursues potential tariffs and
negotiations to try to cut a massive trade deficit with China.
               
    Many major currencies were stuck in narrow ranges, with the
euro starting the week around $1.23, a level around which
it had traded all last week.
    Sterling was an exception. It gained nearly 0.7 percent
above the $1.43 line as investors focused on data that
could help shore up expectations of a May interest rate hike.

========================================================
    Currency bid prices at 10:10AM (1410 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.2383        $1.2329     +0.44%         +0.00%      +1.2394     +1.2325
 Dollar/Yen       JPY=        107.2200       107.3300    -0.10%         +0.00%      +107.6100   +107.1400
 Euro/Yen         EURJPY=     132.78         132.34      +0.33%         +0.00%      +132.9600   +132.1200
 Dollar/Swiss     CHF=        0.9582         0.9622      -0.42%         +0.00%      +0.9637     +0.9579
 Sterling/Dollar  GBP=        1.4322         1.4239      +0.58%         +0.00%      +1.4337     +1.4228
 Dollar/Canadian  CAD=        1.2576         1.2610      -0.27%         +0.00%      +1.2623     +1.2571
 Australian/Doll  AUD=        0.7776         0.7766      +0.13%         +0.00%      +0.7783     +0.7753
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1868         1.1862      +0.05%         +0.00%      +1.1884     +1.1861
 Euro/Sterling    EURGBP=     0.8646         0.8659      -0.15%         +0.00%      +0.8669     +0.8638
 NZ Dollar/Dolar  NZD=        0.7363         0.7357      +0.08%         +0.00%      +0.7367     +0.7334
 Dollar/Norway    NOK=        7.7549         7.7724      -0.23%         +0.00%      +7.7931     +7.7486
 Euro/Norway      EURNOK=     9.6040         9.5904      +0.14%         +0.00%      +9.6133     +9.5814
 Dollar/Sweden    SEK=        8.4072         8.4722      -0.31%         +0.00%      +8.4866     +8.3970
 Euro/Sweden      EURSEK=     10.4133        10.4457     -0.31%         +0.00%      +10.4699    +10.3970
    

    
 (Additional reporting by Saikat Chatterjee in LONDON,
Shinichi Saoshiro in TOKYO;
Editing by Mark Heinrich and Susan Thomas)
  
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