FOREX-Swiss franc near highs, yen climbs on risk aversion

Fri Aug 5, 2011 7:33am EDT

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 (Updates quotes, prices)	
 * Swiss franc hovers near record highs versus euro, dollar
 * Safe-havens in demand in jittery market
 * Yen bounces back from intervention lows, more official
action likely
 * U.S. employment report due at 1230 GMT
 By Neal Armstrong and Nia Williams	
 LONDON, Aug 5 (Reuters) - The Swiss franc hovered near
record highs and the yen rose on a sharp fall in risk sentiment
on Friday as concerns over global growth and euro zone debt
contagion kept safe-haven currencies in demand in volatile
trade. 	
  Stock markets around the world were jittery after heavy
losses in early European trade, with market players fretting
over the threat of another recession in the United States and
policymakers' inability to stem the spread of the euro zone's
debt crisis.	
  Investors sought refuge in gold while the franc slipped a
touch in European dealing, but markets were readying for further
strength in the currency while remaining on alert for any signs
of intervention from the Swiss National Bank.	
 "If risk aversion intensifies euro/Swiss could approach
parity and then we will likely see intervention. But given
market conditions there's reluctance from the SNB to come in,"
said Derek Halpenny, head of global currency research at Bank of
Tokyo-Mitsubishi UFJ.	
 "We are pretty much in global financial crisis mode. It's a
very dangerous time."	
 The franc rose to a record high against the euro 
of 1.0710 francs in early Asian trade but retreated to 1.0859 in
European dealing on fears of official action to weaken the
currency after comments from Swiss National Bank Chairman
Phillip Hildebrand.	
 He was quoted as saying the SNB would not accept a further
appreciation in the franc without acting, having already cut
interest rates this week in an attempt to stem the currency's
strength. 	
 Both the euro and dollar spiked against the Swiss franc at
one point in European trade, igniting speculation the central
bank was intervening. But traders reported no sightings of the
SNB in currency markets so far. 	
 The dollar was last up 0.25 percent against the franc to
0.7668 after hitting a session high of 0.7740 but
remained within sight of a record low of 0.7610 hit on
Wednesday.	
 	
 YEN BOUNCES BACK	
 The yen retraced some of Thursday's heavy losses when
massive selling intervention from the Bank of Japan pushed it
sharply lower against the dollar , but further official
action was expected.	
 Japanese Finance Minister Yoshihiko Noda said he was closely
watching yen moves on Friday, signalling a readiness to continue
selling the currency. 	
 Some market players said further yen intervention could come
later in the session if U.S. non-farm payrolls due at 1230 GMT
undershoot a forecast increase of 85,000 in July and trigger a
fresh bout of risk aversion. 	
 "Dollar/yen is slowly fading but the process of intervention
has not stopped. They impressed the market yesterday but have to
continue to do so," said Sebastien Galy, currency strategist at
Societe Generale.	
 "There is very little incentive to intervene before non-farm
payrolls but if there is a poor number chances are they will
intervene seconds afterwards."	
 A brief spike in the dollar against the yen from around
78.50 yen to an intraday high near 79.40 yen in Asia stirred
talk of more intervention, which proved to be unfounded.	
 The dollar later dipped to trade down 0.8 percent on the day
at 78.42 yen . The euro was down around 0.5 percent at
111.10 yen , having risen above 114 yen the previous
day.	
 Support for the dollar was at 78.27 yen, a 50 percent
retracement of the dollar's rise from its four-month low of
76.29 to Thursday's high of around 80.25 yen.	
 Japan's Nikkei business daily said the solo selling
intervention totalled a record 4 trillion yen. 	
 Analysts said a weak payroll reading would trigger demand
for the U.S. dollar against all currencies except the Swiss
franc and yen, and weigh on the euro which was last up 0.4
percent at $1.4169.	
 The single currency recovered from a fresh three-week low of
$1.4055 hit earlier in the session as Spanish and Italian
government bond yield spreads tightened off their widest levels
in volatile trading . 	
 The European Central Bank surprised many market players on
Thursday by broadening its liquidity operations but some said
that had only made investors think that economic conditions in
Europe may be deteriorating further.	
	
 	
 
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