Market Overview

U.S. Dollar Higher On Geopolitical Tensions

The dollar rose Thursday as geopolitical tensions in the U.K., Turkey and Russia pushed investors to the relative safety of the U.S. currency.

The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently up 0.3% at 89.03.

The Russian ruble fell to a two-year low against the dollar Thursday after the U.S. unveiled a new series of sanctions on Moscow over a nerve-agent attack on a former Russian spy and his daughter in the U.K. The Russian currency was recently down 1%, after dropping nearly 5% at one point.

The Turkish lira fell Thursday after further talks Wednesday failed to guarantee the release of a U.S. pastor accused by Turkey of aiding the failed coup against President Recep Tayyip Erdogan. The Turkish currency was recently down 3.1% at 5.497 lira per U.S. dollar. The lira has fallen steadily against the dollar this month as the country’s central bank struggles to implement effective monetary policy, and as diplomatic relations with the U.S. deteriorate.

The U.S. currency also rose against developed-market currencies Thursday, hitting its highest level against the British pound in almost a year as Brexit tensions continue to shake investors.

“The Brexit nerves are really starting to jangle now and sterling is bearing the brunt,” Steve Barrow, head of G-10 strategy at Standard Bank, wrote in a note Thursday morning. “It looks like we could be in for a wild ride over the next few months, and while we believe that the outcome won’t be as bad as the market fears—and sterling will recover—there could be a good deal of sterling weakness at first.”

U.S. Dollar Higher On Geopolitical Tensions, WSJ, Aug 9
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