Dollar firm as Syria action on hold, oil eases
By Richard Hubbard
LONDON (Reuters) - Signs of strength in the U.S. economy kept the dollar near a four-week high against major currencies on Friday, while oil prices fell on ebbing prospects of an imminent U.S.-led military strike against Syria.
Global equities and most emerging currencies steadied, but both will end the week and the month sharply lower as investors pulled out of riskier assets in expectation of a scaling back of U.S. monetary stimulus as well as western intervention in Syria.
A holiday weekend in America and month-end positioning by traders was keeping activity thin but the persistent worries about the Middle East and the impact of rising U.S. bond yields from the Fed's policy shift meant the respite for higher-risk investments may only be temporary.
"I think the dollar recovery trend remains in place though we may see a pause over the next few days," said Ian Stannard, head of European foreign exchange strategy at Morgan Stanley.
"The underlying fundamental picture is still there and that comes down to a rise global yields and a rise in the U.S. dollar that is still going to weigh on the more vulnerable currencies."
Fears of broader conflict in the Middle East eased after Britain said it would not join any military action against Syria.
That looked set to delay any U.S.-led strike at least until United Nations investigators report back after leaving Syria on Saturday. China has said there should be no rush to force U.N. Security Council action against Syria until the U.N. investigation is complete.
The easing of tensions over Syria sent Brent crude oil below $115 a barrel, off highs of $117 set earlier this week when military action seemed imminent. U.S. crude was down 90 cents to $107.90. Continued...