FOREX -Dollar bounces as Syria concerns fuel safety bid
* Dollar recovers against yen amid Syria tensions * Dollar to likely take on dominant safe-haven role * Yen falls as BoJ's Iwata says bank will continue QE By Gertrude Chavez-Dreyfuss NEW YORK, Aug 28 (Reuters) - The dollar rebounded against the yen and climbed versus the Swiss franc on Wednesday as investors sought the greenback's safety given the risk of Western military action in Syria. Investors, having bought the yen and Swiss franc on Tuesday on Syria-related concerns, also locked in steep gains in those currencies. The dollar, yen, and Swiss franc are considered safe havens in times of economic stress and geopolitical turmoil. The United States and its allies appear to be gearing up for a military strike against Syria, perhaps within days, as punishment for last week's chemical weapons attacks blamed on President Bashar al-Assad's government. "The dollar's rally is clearly related to Syria," said David Starkey, senior market analyst, at Cambridge Mercantile Group in Toronto. "Investors realize that the dollar is still the safest currency to be in right now. Also momentum is indicating that it's time for the dollar to pick up a little ground." In early morning trading, the dollar was up 0.5 percent at 97.50 yen, recovering from an intra-day trough of 96.83 that matched the lowest level two weeks ago, according to Reuters data. The yen had slipped earlier after Bank of Japan Deputy Governor Kikuo Iwata said the bank will continue its quantitative easing until inflation stabilises at 2 percent. On Tuesday, the dollar had tumbled about 1.5 percent, its biggest one-day drop versus the Japanese currency since June 11. Reported options expiries at 97.00 yen and 97.70 yen could keep the pair close to those levels. Ian Stannard, head of European FX strategy at Morgan Stanley said a move above 98.15 yen would be a bullish signal for the dollar, while analysts said that any further dips in the pair would be limited and that the dollar may settle into a range of roughly 96 yen to 99 yen. The dollar was also up 0.2 percent against the Swiss franc at 0.9185 franc and against a basket of currencies, the greenback was up 0.1 percent at 81.285. The euro was up 0.3 percent against the yen at 130.25 yen . Against the dollar, the single currency was down 0.2 percent at $1.3366. Analysts at Citi said the euro could struggle if the U.S. Federal Reserve trimmed its stimulus which would tighten global monetary conditions, raise peripheral funding costs, and hurt the bloc's nascent recovery. "Uncertainty about the political outlook in Italy could pick up as well in coming weeks... renewed pick up in peripheral and growth risks could make case for more ECB easing before long," said Valentin Marinov, head of European G10 FX strategy at Citi. Financial markets remained wary about the prospects of fresh political instability in Italy. With investors avoiding risk, growth-linked currencies struggled. The Australian dollar was down 0.7 percent at US$0.8920 and the New Zealand dollar was down 0.5 percent at US$0.7754.
- Target stores' customers hit by major credit card attack
- UPDATE 3-Saab wins Brazil jet deal after NSA spying sours Boeing bid
- As Modi storms into India's election, a quiet alternative emerges
- Facebook, Zuckerberg, banks must face IPO lawsuit: judge
- U.S. prosecutor defends treatment of Indian diplomat |