FOREX-Yen, Swiss franc rise on U.S.-Iran tensions

Published 06/01/2020, 16:29
Updated 06/01/2020, 16:36
FOREX-Yen, Swiss franc rise on U.S.-Iran tensions
USD/JPY
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USD/CHF
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DXY
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* Japanese yen rises to 3-month high vs dollar

* Oil currencies not impacted yet despite oil price spike

* Markets in wait-and-see mode on next U.S., Iran move

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

(Adds new comment, FX table, updates prices, changes byline, dateline, previous LONDON)

By Gertrude Chavez-Dreyfuss

NEW YORK, Jan 6 (Reuters) - The safe-haven yen and Swiss franc rose against the dollar on Monday on

worries about a broader escalation of conflict in the Middle East after the United States killed Iran's

most prominent military commander.

The moves extended a flight to safety that began on Friday after Iranian Major-General Qassem

Soleimani was killed in a U.S. drone strike on his convoy at Baghdad airport.

U.S. President Donald Trump warned of a "major retaliation" if Iran hit back, while Iran's replacement

commander vowed to expel the United States from the region. "The market is still digesting the implications of the Iran situation," said Edward Moya, senior

market analyst at OANDA in New York. "We're having a little softness in the dollar against safe-haven

currencies, but I think risk appetite will return. If Iran does retaliate, they know they're toast."

On Sunday, Iran further distanced itself from the 2015 nuclear agreement with world powers, which the

United States withdrew from in 2018, saying it would continue to cooperate with the U.N. nuclear watchdog

but would respect no limits to its uranium enrichment work. The yen surged on Monday to a three-month high around 107.75 versus the U.S. dollar, which was last

trading slightly down at 108.13 yen JPY= .

The Swiss franc, another safe-haven currency, rose against the dollar, which fell 0.2% to 0.9701 franc

CHF= .

The dollar index was down 0.1% at 96.714 .DXY .

The greenback is sometimes seen as a safe-haven asset given that most central banks hold it as their

main reserve currency and a big chunk of global companies trade using dollars, but the yen and the franc

represent a more traditional safe-haven bet.

Implied volatility gauges in euro/dollar, the most traded currency pair, on the other hand, were

relatively calm, suggesting investors are not yet fleeing to add protection to their portfolios by buying

currency options.

A currency volatility index developed by Deutsche Bank was only marginally up and still close to its

lowest levels on record. .DBCVIX

Currencies sensitive to global risk appetite were weaker, including the Australian dollar, New Zealand

dollar and Swedish crown.

"Iran is almost certainly to respond in some scale, scope and magnitude," said Lee Hardman, currency

analyst at MUFG.

Therefore "market participants are likely to remain nervous until there is more clarity over how

geopolitical tensions between the U.S. and Iran will proceed," Hardman said, noting that geopolitical

tensions could hurt global economic growth, especially if the price of oil increases.

Elsewhere, the British pound was trading up 0.5% at $1.3144 GBP=D3 ahead of a crucial week when

British lawmakers are due to reconvene to debate the Brexit deal Prime Minister Boris Johnson has agreed

with Brussels.

========================================================

Currency bid prices at 10:19 AM (1519 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar EUR= $1.1184 $1.1158 +0.23% -0.23% +1.1206 +1.1157

Dollar/Yen JPY= 108.1200 108.0800 +0.04% -0.68% +108.1700 +107.7800

Euro/Yen EURJPY= 120.94 120.60 +0.28% -0.83% +121.1300 +120.2900

Dollar/Swiss CHF= 0.9703 0.9725 -0.23% +0.26% +0.9717 +0.9685

Sterling/Dollar GBP= 1.3147 1.3086 +0.47% -0.84% +1.3174 +1.3065

Dollar/Canadian CAD= 1.2976 1.2999 -0.18% -0.08% +1.2990 +1.2965

Australian/Doll AUD= 0.6927 0.6951 -0.35% -1.34% +0.6957 +0.6926

Euro/Swiss EURCHF= 1.0853 1.0846 +0.06% +0.01% +1.0859 +1.0833

Euro/Sterling EURGBP= 0.8505 0.8530 -0.29% +0.60% +0.8545 +0.8501

NZ NZD= 0.6660 0.6663 -0.05% -1.13% +0.6680 +0.6645

Dollar/Dollar

Dollar/Norway NOK= 8.8116 8.8384 -0.30% +0.38% +8.8545 +8.7869

Euro/Norway EURNOK= 9.8546 9.8615 -0.07% +0.18% +9.8835 +9.8427

Dollar/Sweden SEK= 9.4224 9.3961 +0.47% +0.80% +9.4353 +9.3888

Euro/Sweden EURSEK= 10.5380 10.4885 +0.47% +0.66% +10.5430 +10.4871

Currency volatility index close to record lows https://tmsnrt.rs/2SSaogq

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