* Iran launches missiles at US-led forces in Iraq
* Japan's yen jumps to 3-month high before retreating
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Dhara Ranasinghe
LONDON, Jan 8 (Reuters) - Currencies whipsawed on Wednesday,
with the safe-haven Japanese yen and Swiss franc initially
jumping after Iran fired rockets at U.S. forces in Iraq, before
they retreated on a perception that the strikes would not lead
to a wider regional conflict.
Iran said it had fired 15 missiles at U.S. targets in Iraq
early on Wednesday in retaliation for last week's U.S. drone
strike that killed Iranian commander Qassem Soleimani, stoking
fears of a new war in the Middle East. The Japanese yen initially jumped to three-month highs
against the dollar before retreating, with the absence of
immediate reports of casualties steadying nerves.
Twitter posts from both sides playing down the prospect of
further escalation also helped calm currency markets.
U.S. President Donald Trump tweeted that a damage assessment
was "So far, so good!" and said "all is well", promising a
further statement on Wednesday. Iranian Foreign Minister
Mohammad Javad Zarif tweeted that the attack was "proportionate"
and that "we do not seek escalation or war".
Iraq's military said there were no casualties among its
forces.
"News that Iran had launched ballistic missiles at two bases
that house U.S. troops in Iraq sparked an immediate sell-off in
risk," said Adam Cole, chief currency strategist at RBC Capital
Markets, referring to a fall in dollar/yen and a spike in crude
oil prices. O/R
"However, a growing sense that this will be the full extent
of Iranian retaliation has seen both moves fully reverse and G10
currencies are back to close to where they closed yesterday."
SAFE HAVENS
The yen, regarded as a haven in times of turmoil by virtue
of Japan's status as the world's biggest creditor, was virtually
unchanged on the day at 108.41 per dollar JPY=EBS .
That stabilisation followed a spike of as much as 0.8% to a
three-month high of 107.65 yen per dollar.
The Swiss franc CHF=EBS similarly gave back gains and so
did gold XAU= , by a lesser extent. GOL/
Switzerland's currency was steady at 0.9707 francs per
dollar, having briefly jumped around 0.4% to one-week highs.
The franc was also steady against the euro EURCHF=EBS .
"If the market was really worried that the end of the world
was nigh, dollar/yen would have collapsed, and that's clearly
not been the case," said Stuart Oakley, global head of flow FX
at Nomura in Singapore.
Investors' focus will now be on what response, if any, the
United States is planning.
Elsewhere, China's yuan CNH= , held on to most of Tuesday's
steep gains at 6.9460 per dollar, after a bumpy ride.
Against other major currencies, the dollar was mostly
steady, with the euro hovering around $1.1152 EUR=EBS .
The greenback had been buoyed on Tuesday by a strong showing
in a non-manufacturing business survey, released ahead of
Friday's key U.S. jobs report.