Published: Sat, May 20, 2017
Science | By Hubert Green

Dollar has worst week in over a year amid political uncertainty

Dollar has worst week in over a year amid political uncertainty

NEW YORK, May 19 (Reuters) - The U.S. dollar fell and was poised for its worst week in more than a year while world stock markets edged up on Friday amid some calm following declines earlier in the week spurred by uncertainty relating to Donald Trump's U.S. presidency.

Wall Street was expected to nudge higher when it reopens after a tentative recovery on Thursday [.N].

Against the safe-haven Swiss franc, the United States dollar fell 0.45%, touching a fresh 6-month low.

Uproar over Trump's firing of James Comey as Federal Bureau of Investigation director and allegations, repeatedly denied, of links between the president's team and Russian Federation, have pressured the dollar.

U.S. Treasury yields rose slightly on Friday as stocks recovered, but yields stayed near one-month lows.

Foley added that worries over Trump had also coincided with a run of weaker US data that has seen a slight pull-back of expectations that the Federal Reserve will hike interest rates next month, which had also pressured the dollar.

"Everything has turned upside down - European political risks have faded, the economy is looking strong, while in the USA everybody is anxious", said DZ Bank strategist Daniel Lenz.

Besides worries surrounding Trump, the US currency has suffered from a resurgent euro, which has gained more than 2 percent this week.

It hasn't only been about Trump though.

The greenback also sank against emerging market currencies, which were dragged lower on Thursday by news that Brazilian President Michel Temer had been recorded offering bribes to silence testimony by a potential witness in the country's wide-ranging corruption probe.

Brazilian markets cratered on Thursday, with stocks down almost 9 percent and the real 8 percent - the currency's biggest fall since the 1999 devaluation and crisis, although it looked steadier ahead of the start of local trading. "But in the medium term, the next 3-6 months, this is not necessarily a threat to EM more broadly". MSCI's main emerging markets index was up 1.1 percent on Friday.

Oil prices were heading for a second week of gains. On Wednesday it hit its lowest since November 9, the day of the US election results, and traded close to that level on Friday. Global benchmark Brent was up a similar amount too at $52.89, near a four-week high.

"Risk aversion is rife once again with the brewing political storm surrounding President Trump in the US largely being blamed", said Craig Erlam, a market analyst with retail broker Oanda in London. Spot gold was up 0.5 percent at $1,253.31 per ounce, as of 1358 GMT, putting it up 1.9 percent for the week.

In commodities, safe-haven gold was on track for its best week in five as the dollar softened.

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