December 24, 2018 / 2:28 PM / 6 months ago

FOREX-Dollar weakens on govt shutdown concerns, weaker stocks

    * Investors fear prolonged U.S. government shutdown
    * Treasury's Mnuchin tries to soothe markets
    * Concerns over more rate increases hurts stocks, greenback

 (New throughout, updates prices, market activity and comments
to U.S. market open, new byline, changes dateline, previous
    By Karen Brettell
    NEW YORK, Dec 24 (Reuters) - The U.S. dollar slipped against
the euro and Japanese yen on Monday as concerns about the
possibility of a prolonged government shutdown and weak equity
markets reduced demand for the greenback.
    U.S. President Donald Trump's budget director and chief of
staff said on Sunday the partial U.S. government shutdown could
continue to Jan. 3, when the new Congress convenes and Democrats
take over the House of Representatives.
    The U.S. Senate adjourned on Saturday, unable to break an
impasse over Trump's demand for more funds for a wall on the
border with Mexico that Democrats are unwilling to
    The dollar index against a basket of six major currencies
 dipped 0.39 percent to 96.577. It has fallen from a
one-and-a-half-year high of 97.711 on Dec. 14.
    MSCI's world equity index, which tracks
shares in 47 countries, was 0.15 percent lower on the day and
down almost 7 percent in the past seven sessions, its worst
stretch of daily losses since January 2016. Wall Street was set
to open lower in a shortened session on Monday.

    U.S. Treasury Secretary Steven Mnuchin said on Sunday that
he had held a series of phone conversations with the heads of
the six largest U.S. banks in an apparent attempt to soothe
nervous investors.
    "The CEOs confirmed that they have ample liquidity available
for lending," the Treasury Department said.
    Mnuchin "also confirmed that they have not experienced any
clearance or margin issues and that the markets continue to
function properly," the Department said.
    "Mnuchin attempted some damage control," Win Thin, global
head of currency strategy at Brown Brothers Harriman, said in a
note, adding that the move could backfire.
    "Yes, markets have been worried about recession and Fed
policy mistakes. Until this weekend, however, markets were not
that concerned about liquidity or clearance issues. And with
markets on edge, the last thing they needed was another issue to
worry about," Thin said.
    The Treasury Department also said Mnuchin will convene a
call on Monday with the president's Working Group on Financial
Markets, which includes Washington's main stewards of the U.S.
financial system and is sometimes referred to as the "Plunge
Protection Team."
    The dollar has weakened since the Federal Reserve on
Wednesday adopted a less dovish outlook on further rate hikes
than many had hoped, raising concerns that the U.S. central bank
will keep raising rates into a weakening U.S. economy.
    Trading volumes were thin on Monday with Japan closed
and most global markets preparing to shut for the Christmas
holiday on Tuesday.
    Currency bid prices at 9:07AM (1407 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1415        $1.1367     +0.42%         -4.84%      +1.1420     +1.1353
 Dollar/Yen       JPY=        110.5700       111.2100    -0.58%         -1.86%      +111.1900   +110.5700
 Euro/Yen         EURJPY=     126.20         126.45      -0.20%         -6.64%      +126.7400   +125.9000
 Dollar/Swiss     CHF=        0.9896         0.9950      -0.54%         +1.57%      +0.9951     +0.9895
 Sterling/Dollar  GBP=        1.2691         1.2630      +0.48%         -6.08%      +1.2695     +1.2631
 Dollar/Canadian  CAD=        1.3598         1.3598      +0.00%         +8.12%      +1.3603     +1.3566
 Australian/Doll  AUD=        0.7052         0.7032      +0.28%         -9.60%      +0.7069     +0.7034
 Euro/Swiss       EURCHF=     1.1298         1.1310      -0.11%         -3.35%      +1.1344     +1.1299
 Euro/Sterling    EURGBP=     0.8993         0.9000      -0.08%         +1.24%      +0.9027     +0.8979
 NZ               NZD=        0.6723         0.6717      +0.09%         -5.12%      +0.6743     +0.6707
 Dollar/Norway    NOK=        8.7595         8.7611      -0.02%         +6.73%      +8.7757     +8.7203
 Euro/Norway      EURNOK=     10.0010        9.9706      +0.30%         +1.55%      +10.0055    +9.9238
 Dollar/Sweden    SEK=        9.0577         9.0413      +0.55%         +10.44%     +9.0735     +9.0167
 Euro/Sweden      EURSEK=     10.3408        10.2838     +0.55%         +5.10%      +10.3480    +10.2639

 (Editing by Jeffrey Benkoe)
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