Forex - Trump concerns send yen, Swiss franc to multi-week highs

Posted May 18, 2017

US share futures and the dollar tumbled in Asian trade on Wednesday after reports President Donald Trump asked then-FBI Director James Comey to end a probe into Trump's former national security advisor.

The dollar's index against a basket of six major currencies .DXY =USD dropped to 98.063, essentially giving up all of the gains it made after Trump's election victory in November.

The reports raised questions over whether obstruction of justice charges could be laid against Trump, weakening confidence in the USA president's ability to push through an aggressive stimulus program that investors had been banking on since his election last November.

At 10:46 a.m. ET (1446 GMT), the Dow Jones Industrial Average was down 234.47 points, or 1.12 percent, at 20,745.28, the S&P 500 was down 24.18 points, or 1.01 percent, at 2,376.49 and the Nasdaq Composite index was down 83.65 points, or 1.36 percent, at 6,086.22.

That was followed late Tuesday by claims by recently fired Federal Bureau of Investigation boss James Comey that Trump pressed him to drop a probe into ex-national security advisor Michael Flynn over his links to Moscow.

Oil jumped 2 percent to its highest in more than three weeks on Monday, briefly topping $52 a barrel after Saudi Arabia and Russian Federation said that supply cuts need to last into 2018, a step towards extending an OPEC-led deal to support prices for longer than first agreed.

In April, the yen had firmed to the low 108 yen-range against the dollar, but temporarily softened on speculation that the U.S. Federal Reserve would raise interest rates, expanding the Japan-U.S. rate differential. Barrick rose 2.2 per cent to $23.53, while Agnico Eagle Mines Ltd was up 2.1 per cent at $68.17. Early Asian markets such as Australia .AXJO are set to lead the region higher, with metal and oil shares in focus.

"Until Friday, markets had been focusing only on the bright side of the USA economy".

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US stock futures traded lower in early pre-market trade.

Analysts said the controversy around Trump has raised fears that he might not last a whole term and that, even if he did, there were too many distractions for him to be able to successfully push through his economic stimulus programme. Real-estate was the only one of 11 groups in the S&P 500 to advance. The Energy Information Administration's weekly report on petroleum inventories in the US will be released at 10:30 a.m. ET.

KEEPING SCORE: In Europe, Germany's DAX was down 0.3 percent at 12,768 while the CAC 40 in France fell 0.4 percent to 5,387. The dollar bought 112.35 yen, well down from recent peaks above 114 yen seen last week.

The euro touched fresh six-month highs, with EUR/USD up 0.23% at 1.1109.

Benchmark 10-year notes gained a full point in price to yield 2.22 percent, the lowest since April 21, and down from 2.33 percent late on Tuesday. Gold futures rose 1.8 percent to $1,256.9 an ounce. Hong Kong's Hang Seng index slipped 0.2 percent to 25,293.63.

Brent crude futures were down 46 cents, or 1 percent, from their last close at $51.19 per barrel.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.6 percent to its highest level since June 2015.