* Dollar hits 2-week low versus safe haven yen
* Euro fall slows as dollar takes hits
* Aussie slips to 2-mth low but pares losses on China data
(Adds reaction to BOJ, China trade data)
By Shinichi Saoshiro
TOKYO, Aug 8 The dollar slipped against the safe
haven yen on Friday after news that U.S. President Barack Obama
had authorised air strikes in Iraq added to simmering
geopolitical tensions and sapped risk appetite.
Obama said in an address that he authorised targeted strikes
to protect the besieged Yazidi minority and U.S. personnel in
Iraq, after the Iraqi government requested help.
The benchmark U.S. Treasury yield fell to a 14-month low as
bond prices rose in the wake of the air strike news, further
dampening demand for the dollar.
"Risk assets and dollar/yen are being sold after news of the
airstrike. There was already talk of the air strike (authority
being granted) overnight and now that it has been confirmed, the
market is trying to digest it," said a trader at a large
Japanese bank in Tokyo.
Tokyo's Nikkei stock average shed 3 percent and
other Asian bourses also fell across the board.
"Now it's up to how far the flight from risk assets will go.
There are many views on the U.S. involvement in Iraq, but it
doesn't look like the operations will end any time soon," the
The dollar was down 0.3 percent to 101.79 against the
yen, traditionally sought in times of global tension, having
fallen as low as 101.58, a two-week trough.
The greenback had already suffered losses overnight on
concerns over the escalating conflict in Ukraine and a Russian
ban on Western food imports.
"Broadly speaking dollar/yen is still in a range centred
around 102. But it failed to establish a foothold above 103 last
week after the weaker-than-expected U.S. non-farm payrolls,"
said Masafumi Yamamoto, market strategist at Praevidentia
Strategy in Tokyo.
"With the economic impact of the Ukrainian conflict now
drawing more attention and Treasury yields declining, downward
bias for the dollar is building," he said.
The yen showed little reaction to Bank of Japan's widely
expected decision to stand pat on monetary policy.
With the dollar taking hits, the euro managed to slow its
slide, having fallen on Thursday after European Central Bank
President Mario Draghi struck a cautious note on the euro zone
The European Central Bank's decision on Thursday to leave
interest rates unchanged on Thursday was not unexpected, but
Draghi said the Ukraine crisis threatened the economy and
weakened the euro.
The euro traded little changed at $1.3361 after
shedding about 0.15 percent overnight. The common currency,
which hit a nine-month low of $1.3333 on Wednesday, stands to
lose about 0.5 percent on the week.
The Australian dollar, already bruised on Thursday after
data showed a surprising jump in the domestic unemployment rate,
extended losses after the Reserve Bank of Australia stuck to its
stance of keeping interest rates at a record low for some time
The Aussie pared some losses after exports from China,
Australia's major trading partner, jumped 14.5 percent in July
from a year earlier.
The Aussie was down 0.2 percent at $0.9255 after falling to
as low as $0.9240, the lowest since early June.
(Editing by Shri Navaratnam, Eric Meijer and Simon