January 19, 2018 / 8:40 PM / a month ago

CORRECTED-FOREX-U.S. shutdown fears pressure dollar, mark worst run since 2015

 (Corrects spelling of company name in 7th paragraph to
"OppenheimerFunds" instead of "OpperheimerFunds")
    * Republicans scramble for funding deal before midnight
deadline
    * Some see modest market effect from a U.S. government
shutdown
    * Euro near 3-year high, yen close to 4-month high vs dollar
    * Rising U.S. yields fail to lift greenback

    By Richard Leong
    NEW YORK, Jan 19 (Reuters) - The dollar held steady above a
three-year low versus a basket of currencies on Friday, marking
a fifth week of falls and its longest losing streak since May
2015 as worries over a possible U.S. government shutdown
weighed. 
    On Thursday, the U.S. House of Representatives passed a bill
to fund government operations through to Feb. 16 and avoid
agency shutdowns from Saturday when existing allocations expire.
The bill has yet to be approved by the Senate, where it faces an
uncertain future. 
    Democratic Senate leader Chuck Schumer met with Republican
President Donald Trump on Friday to find ways to avert a
shutdown. Schumer suggested some progress was made but they
still had "a good number of disagreements."
    "At the start of the week, it was an outside risk. Now it's
a real risk," Vassili Serebriakov, currency strategist at Credit
Agricole in New York, said of a government shutdown.
    Even as the likelihood of a shutdown grew, the greenback
managed to hold steady against a group of major currencies on a
trade-weighted basis.
    Some investors downplayed a possible shutdown, saying the
market impact would be mild anyway.
    "It's more a political event than an economic one," said
Alessio de Longis, portfolio manager for OppenheimerFunds'
global multi-asset group. "We have been in this situation
before."
    At 3:26 p.m. (2026 GMT), the trade-weighted dollar index
 was up 0.06 percent at 90.591. It touched the lowest
level since December 2014 this week, with investors selling on
the view that more central banks will join the Federal Reserve
in raising interest rates, after years of ultra-loose policy
adopted to combat the 2008 global financial crisis and
subsequent recessions.
    The euro was down 0.06 percent at $1.2230, below a
three-year high of $1.2323 touched on Wednesday. The common
currency booked a fifth straight week of gains in advance of
next Thursday's European Central Bank meeting.
    The dollar was down 0.41 percent at 110.64 yen, with
its rebound from Wednesday's four-month low of 110.19 yen
already fading even as benchmark U.S. 10-year yield
rose to the highest level since Sept. 2014.
    A slim reduction in the Bank of Japan's bond purchases this
month spurred speculation about a possible pullback in its
policy, even though many market players think any move will be
many months away.
    "Markets are increasingly sensitive to the prospect of a
less-dovish BOJ, which is putting pressure on dollar/yen," UBS
Wealth Management analysts said in a note. They added that they
will be looking to the BOJ's policy meeting next week to gain
more clarity on its stance.    
    "For now, we do not think the BOJ has any urgency to shift
its yield curve control regime," they added. 
    Another factor behind the dollar's weakness has been global
investors, including sovereign wealth funds and central banks,
favoring other currencies.
========================================================
    Currency bid prices at 3:21PM (2021 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.2229        $1.2237     -0.07%         +1.94%      +1.2295     +1.2219
 Dollar/Yen       JPY=        110.6300       111.0900    -0.41%         -1.81%      +111.1200   +110.5000
 Euro/Yen         EURJPY=     135.30         135.96      -0.49%         +0.09%      +136.0400   +135.1900
 Dollar/Swiss     CHF=        0.9622         0.9587      +0.37%         -1.24%      +0.9628     +0.9536
 Sterling/Dollar  GBP=        1.3870         1.3891      -0.15%         +2.65%      +1.3945     +1.3841
 Dollar/Canadian  CAD=        1.2486         1.2416      +0.56%         -0.72%      +1.2486     +1.2399
 Australian/Doll  AUD=        0.7999         0.7998      +0.01%         +2.54%      +0.8038     +0.7994
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1768         1.1735      +0.28%         +0.68%      +1.1772     +1.1713
 Euro/Sterling    EURGBP=     0.8816         0.8809      +0.08%         -0.75%      +0.8846     +0.8805
 NZ               NZD=        0.7282         0.7300      -0.25%         +2.77%      +0.7323     +0.7275
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        7.8603         7.8457      +0.19%         -4.22%      +7.8750     +7.8241
 Euro/Norway      EURNOK=     9.6136         9.6044      +0.10%         -2.39%      +9.6418     +9.5987
 Dollar/Sweden    SEK=        8.0378         8.0184      +0.18%         -2.00%      +8.0433     +7.9997
 Euro/Sweden      EURSEK=     9.8311         9.8134      +0.18%         -0.08%      +9.8418     +9.8091
    

    
 (Additional reporting by Jemima Kelly in New York; Hideyuki
Sano in Tokyo; Editing by Susan Thomas and Tom Brown)
  
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