Sterling soars after UK PM calls early election, dollar dips

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MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS closed 0.81 percent lower, while Japan's Nikkei .N225 rose 0.35 percent.

"There was a reversal of the recent flight-to-safety trend on Wednesday that we'd been seeing", said Bill Northey, chief investment officer at the private client group of U.S. Bank in Helena, Montana. Meanwhile, the Chinese market plunged for four consecutive sessions due to tighter regulations.

Sterling rose to a more than six-month high against the dollar on Tuesday after British Prime Minister Theresa May called for an early general election, boosting hopes that a victory could strengthen her party's majority in government ahead of Brexit negotiations.

Sterling's strength sent the FTSE 100 lower, dropping 1.4% or around 105 points to 7,221 points.

"We still think the dollar is going to strengthen over time based on the outlook for USA monetary policy... but for now, with markets not heavily focused on monetary policy, it could explain this consolidation" for the greenback, said Eric Viloria, currency strategist at Wells Fargo.

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United States treasury secretary Steven Mnuchin was quoted saying that Trump is "absolutely not" trying to talk down the strength of the U.S. dollar in Wednesday's edition of the Financial Times, playing down remarks by Trump in an interview last week when he said the dollar was "getting too strong".

The pound was lording it at $1.2824 on Wednesday having shattered a months' old trading range with a jump of 2.2 percent overnight.

The Pound has been rising strongly against the New Zealand Dollar as it maintains its uptrend. It also cleared the 200-day moving average for the first time since June, putting the squeeze on a raft of speculative short positions.

Against its perceived safe-haven Japanese counterpart, the dollar was slightly higher on the day at 108.84 yen JPY= , pulling away from five-month lows touched on Monday.

OIL: U.S. crude oil futures added 13 cents to $52.54 per barrel in electronic trading on the New York Mercantile Exchange.

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The euro EUR=EBS was steady at $1.0639, retaining Monday's 0.25 percent gain. Yields on 10-year Treasury paper sank to 2.17 percent, a world away from the 2.629 peak seen in March.

Downbeat US economic data also pushed down US Treasury yields and weighed on the dollar.

Oil prices slipped as USA crude stockpiles fell by less than expected and a US government report said shale oil output in May was likely to post the biggest monthly increase in more than two years.

USA crude fell 0.49 percent to $52.39 per barrel and Brent was last at $54.88, down 0.87 percent on the day.

Ahead of the speculations, Wall Street views it as positive, setting gains for Dow futures up by 0.1 percent and S&P futures adding 0.3 percent.

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