* Yen hits five-month high as Iran-U.S. tensions flare
* Dollar touches 2-week lows on bets on U.S. rate cuts
* Euro supported by better-than-expected business surveys
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Updates market action, changes dateline, previous LONDON)
By Richard Leong
NEW YORK, June 21 (Reuters) - The yen rose to a five-month
high versus the dollar on Friday on growing tensions between
Iran and the United States, while the dollar slipped to a
two-week low against a basket of currencies on bets the Federal
Reserve would start lower interest rates.
The euro EUR=EBS hit a 1-1/2 week peak versus the
greenback after French and German business activity strengthened
more than expected in June, according to surveys. Iran's downing of an unmanned U.S. surveillance drone stoked
fears about a military conflict between the two nations
following a spate of attacks on oil tankers in the Gulf region.
An initial wave of safe-haven buying of the yen faded in the
wake of news that U.S. President Donald Trump shelved a missile
strike against Iran and preferred a dialogue with Tehran
especially over its nuclear program.
"The Iranians for their part refused the overture for now,
so tensions remain high, but the risk of conflict appears to
have eased," said Boris Schlossberg, managing director of FX
strategy at BK Asset Management in New York.
The yen moved to 107.045 per dollar JPY=EBS during Asian
trading, which was its strongest level since Jan. 3. It was last
down 0.34% at 107.68 per dollar.
The dollar reversed some of its losses from the prior two
sessions after the Federal Reserve on Wednesday signaled it was
prepared to lower interest rates later this year. The Fed and the European Central Bank this week hinted they
were open to ease policies to counter a global economic
slowdown, exacerbated by global trade tensions.
The focus now shifts to whether the United States and China
can resolve their trade row at a summit in Japan next week of
leaders from the Group of 20 leading world economies.
Trump and Chinese President Xi Jinping are due to meet at
the G20 next weekend, but analysts say chances of a decisive
breakthrough are low. The greenback was 0.27% lower at $1.1323 per euro after
touching $1.1334, the lowest since June 12.
Against a basket of currencies, the dollar .DXY was 0.04%
lower.
The dollar got a lift on news of stronger-than-forecast
sales in U.S. existing homes in May. The encouraging news offset IHS Markit data that showed a
manufacturing growth weakened to its most sluggish level since
September 2009 in June, while services sector activity slumped
to its lowest level since February 2016. Friday's U.S. data did not change traders expectations the
Fed would lower key lending rates, as early as July. They priced
in the probability policy-makers may reduce borrowing rates by
at least 75 basis points at year-end, based on calculations by
CME Group's FedWatch tool on its interest rates futures.
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Currency bid prices at 10:42AM (1442 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1324 $1.1291 +0.29% -1.26% +1.1334 +1.1283
Dollar/Yen JPY= 107.6200 107.2900 +0.31% -2.39% +107.6900 +107.0600
Euro/Yen EURJPY= 121.89 121.15 +0.61% -3.43% +121.9100 +120.9600
Dollar/Swiss CHF= 0.9816 0.9818 -0.02% +0.02% +0.9838 +0.9805
Sterling/Dollar GBP= 1.2667 1.2699 -0.25% -0.71% +1.2724 +1.2644
Dollar/Canadian CAD= 1.3216 1.3189 +0.20% -3.09% +1.3221 +1.3162
Australian/Doll AUD= 0.6914 0.6922 -0.12% -1.92% +0.6938 +0.6904
ar
Euro/Swiss EURCHF= 1.1120 1.1084 +0.32% -1.21% +1.1126 +1.1076
Euro/Sterling EURGBP= 0.8938 0.8889 +0.55% -0.51% +0.8945 +0.8884
NZ NZD= 0.6564 0.6585 -0.32% -2.26% +0.6604 +0.6555
Dollar/Dollar
Dollar/Norway NOK= 8.5485 8.5537 -0.06% -1.04% +8.5777 +8.5364
Euro/Norway EURNOK= 9.6818 9.6607 +0.22% -2.26% +9.6929 +9.6521
Dollar/Sweden SEK= 9.3892 9.4147 +0.08% +4.75% +9.4267 +9.3809
Euro/Sweden EURSEK= 10.6330 10.6250 +0.08% +3.60% +10.6420 +10.6120
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GRAPHIC-Bets on bold first rate-cut from the Fed https://tmsnrt.rs/2XTkkpn
GRAPHIC-Bets on bold first rate-cut from the Fed interactive
https://tmsnrt.rs/2Y3UHTf
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