Dollar Falls As Geopolitical Fears Lead to Trade Reverse

By Dow Jones Business News, 
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By James Ramage

The dollar weakened against the euro Friday after the start of U.S. airstrikes in Iraq and other geopolitical tensions coupled with the lowest U.S. bond yields in more than a year to prompt investors to shift out of bets on the greenback.

The euro rose 0.3% against the dollar to $1.3410, while the greenback slipped 0.1% versus the yen to Y102.04 in late- afternoon trade.

Friday's stronger euro came despite monetary policy and most economic data in the U.S. and euro zone indicating further weakness for the common currency, with investors recently betting heavily on a stronger dollar. But the recent increase of hostilities in Ukraine, Israel and Iraq has led to uncertainty and volatility across markets, forcing investors to make changes to their portfolios.

One place financial managers have advised their clients to exit positions is in currencies, which led to dollar selling and euro buying Friday, according to Steven Englander, head of G-10 foreign exchange strategy at Citigroup Inc.

"The dollar's run has given way to profit taking," said Joe Manimbo, senior market analyst at Western Union. There is also "the sense in the market that it will be a long time before the [Federal Reserve] raises rates," he added.

In other trading, the Canadian dollar plunged against most rival currencies on the back of employment numbers for July that fell well below analysts' expectations. The greenback increased 0.5% versus the Canadian dollar, to C$1.0974. The loonie, as the currency is also called, lost 0.4% versus the yen, to Y93.03.

--Write to James Ramage at james.ramage@wsj.com


  (END) Dow Jones Newswires
  08-08-141636ET
  Copyright (c) 2014 Dow Jones & Company, Inc.


This article appears in: Forex and Currencies

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