Politics

FOREX-Euro, yen gain as U.S. political uncertainty weighs on dollar

Evaluating market performance charts

* U.S. government partial shutdown keeps investors nervous

* Chinese plans to remove tariffs lifts sentiment, Aussie

* Most markets quiet in thin trading before holidays

By Tommy Wilkes

LONDON, Dec 24 (Reuters) - The euro and the Japanese yengained in thin trading on Monday as concerns about a partialU.S. government shutdown weighed on investor sentiment and thedollar, although Chinese plans to cut tariffs on a range ofgoods helped to lift the mood.

Trading volumes were thinning out with most global marketsset to shut for Christmas, while Japan was closed on Monday fora holiday.

After a bruising few weeks in which worries aboutspluttering global growth have knocked markets lower, investorswere reluctant to take on many new risks at the end of the year.

A less dovish than expected Federal Reserve meeting alsoheightened fears the U.S. central bank will be raising interestrates into a weakening U.S. economy.

A partial U.S. government shutdown, which could continue toJan. 3, when the new Congress convenes and Democrats take overthe House of Representatives, has also contributed to thesouring of risk sentiment.

The Japanese yen, perceived as a safe place to put money intimes of uncertainty, rose 0.3 percent against the dollar to110.81 JPY= , bringing its gains in the last six days to 2.5percent.

The euro EUR= rose 0.2 percent and last fetched $1.1398.

Against a basket of its rivals, the dollar slipped 0.2percent to 96.72 .DXY .

"The global equity market rout has been driving sentiment inthe currency markets. I don't see any significant rebound inrisk sentiment yet," said Stephen Innes, head of Asia trading,Oanda.

The Swiss franc, another currency viewed as a safe-haven,rose 0.2 percent versus the dollar CHF= but was down against abroadly stronger euro EURCHF= .

There was some improvement in the mood, however, after Chinaunveiled plans to remove import and export tariffs in 2019 on arange of goods, soothing fears about an ongoing trade disputebetween Chin and the United States.

"We are seeing some positive developments. "We are seeingthe Aussie dollar doing a little bit better," said Alvin Tan, anFX strategist at Societe Generale.

China's offshore yuan rose 0.3 percent to 6.9055 CNH= .

The Australian dollar rose half a percent to $0.7067AUD= .The Aussie is very sensitive to Chinese economic developmentsgiven China is the country's largest trade partner.

Sterling rose 0.3 percent versus the dollar to $1.2671GBP= , although Tan at Societe Generale noted the recentrecovery in the pound was more to do with dollar weakness thanmore positive sentiment towards the British currency. (Additional reporting by Vatsal Srivastava in Singapore;Editing by Mark Potter) ((thomas.wilkes@thomsonreuters.com))


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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