MW: Dollar gains vs. rivals as Mideast unrest continues
By Lisa Twaronite, MarketWatch
TOKYO (MarketWatch) — The dollar rose in Asian trading Tuesday as investors continued to fear the fallout from ongoing turmoil in the Middle East and Northern Africa, which increased the appeal of currencies with perceived safe-haven status.
The dollar index (DXY 78.09, +0.40, +0.52%) , which measures the U.S. unit against a basket of six major rivals, rose to 78.091 from 77.739 in late European trading on Monday. U.S. markets were closed for a public holiday Monday.
Against the Japanese yen, the dollar (USDYEN 83.3100, +0.2000, +0.2406%) rose to ¥83.32 from ¥83.18 late Monday.
Also weighing on the yen, Moody’s Investors Service cut Japan’s ratings outlook to negative from stable. Read more on Moody's downgrade of Japan 's outlook.
The euro (EURUSD 1.3583, -0.0091, -0.6654%) slipped to $1.3585 from $1.3666 late Monday, while the British pound (GBPUSD 1.6164, -0.0058, -0.3575%) traded at $1.6169, down from $1.6221.
The so-called “Jasmine revolution” began in Tunisia last month, leading to the overthrow of its leader. Uprisings spread to Egypt, leading to the removal of its president, and then to Morocco, Bahrain and Yemen. Investors fear similar uprisings could erupt in key crude-oil producer Saudi Arabia, or even in China.
“The Jasmine Revolution in the Middle East is beginning to have a more significant impact on FX markets following its spread to Libya,” said David Forrester and Yuki Sakasai at Barclays Capital in a note to clients.
“While the reaction of foreign exchange markets to the political turmoil in the Middle East has been subdued so far, the USD-Gold correlation, which tends to strengthen during periods of significant market distress, remains positive and high, which suggests that investors are cautious,” they said.
Gold prices extended gains in electronic trading on Tuesday, as political tensions in Libya escalated. See Metals Stocks for more on gold.
Gold futures (GCG11 1,403, +14.80, +1.07%) rose $15.50, or 1.1%, to $1,404.10 an ounce in what could be the seventh straight day of gains for the metal.
