Dollar gains versus euro as Israel-Palestinian conflict spurs safety bid
Business
Dollar gains versus euro as Israel-Palestinian conflict spurs safety bid
NEW YORK/LONDON (Reuters) - The safe-haven dollar rose on Monday against the euro as military clashes between Israel and the Palestinian Islamist group Hamas raised concerns the conflict might widen beyond Gaza, but the dollar fell against other major currencies.
Israel's response to the unprecedented multi-pronged attack by Palestinian gunmen from the Gaza Strip will "change the Middle East," Prime Minister Benjamin Netanyahu said on Monday.
Risk sentiment was fragile as Israel said it had called up an unprecedented 300,000 reservists and warned residents of parts of the Gaza Strip to leave, in the latest signs it could be planning a ground assault to defeat Hamas.
The Israeli shekel weakened about 2.9% to 3.9506 per dollar after the Bank of Israel announced it would sell up to $30 billion of foreign currency in the open market to maintain stability. Earlier, the shekel tumbled more than 3% to an almost eight-year low of 3.9880 per dollar.
"It's a little bit of risk aversion, not a wholesale panic and not a huge amount of sell-off, but just a little bit of a move towards safety as markets wait to see how things develop," said Brad Bechtel, global head of FX at Jefferies in New York.
"What we've been getting used to over time is the fact that geopolitical events typically have a very short-lived market impact," he said.
