LIVE MARKETS-Concern brewing over a weaponised dollar

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CONCERN BREWING OVER A WEAPONISED DOLLAR

The U.S. strike on Venezuela and the capture of President Nicolas Maduro has only ruffled markets briefly, but a number of analysts and investors have said it is another reason to exercise caution when considering the dollar as a safe-haven.

The dollar rose to its highest in almost a month on Monday, when markets first reacted to the dramatic events at the weekend, but has since released those gains, as traders switched their focus back to this week's run of economic data and Friday's jobs report.

Policymakers at the European Central Bank have been telling banks to watch their dollar exposure and their reliance on the U.S. currency for months now. On Tuesday, Francois Villeroy de Galhau, who heads the Bank of France, said attacks on the Federal Reserve's independence, doubts about Washington's fiscal discipline and tariffs are adding to concern that the Trump administration could weaponise the dollar-based payments system.

Nearly one-fifth of euro zone banks' funding needs are denominated in dollars. Lenders typically borrow in markets for short-term funding without any issues, but these can quickly shut down in times of financial stress. In the past, European central banks borrowed dollars from the Fed to make up for the shortfall.

(Amanda Cooper)

EARLIER ON LIVE MARKETS:

PANMURE LIBERUM EXPECTS THE MUSIC TO KEEP PLAYING CLICK HERE

MIXED START FOR EUROPE, STOXX 600 INCHES UP TO ANOTHER RECORD CLICK HERE

EUROPE BEFORE THE BELL: FUTURES IN THE GREEN CLICK HERE

STOCKS KEEP CALM, CARRY ON RECORD RUN CLICK HERE