* Safe-haven currencies gain as Russia-Ukraine tension
* Dollar rally pauses as investors trim long positions
* Yellen speech could counter hawkish tone in Fed minutes
* ECB's Draghi also due to speak at Jackson Hole gathering
(Recasts, adds fresh comment)
By Anirban Nag
LONDON, Aug 22 The yen and the Swiss francs rose
against the euro on Friday, helped by safe-haven inflows after a
Russian aid convoy crossed into Ukraine without permission from
Kiev, rattling investors.
The dollar, meanwhile, hovered below its 2014 peak against a
basket of major currencies on Friday, as investors stayed
cautious ahead of a speech by U.S. Federal Reserve Chair Janet
While Yellen's speech will take centre stage later in the
session and potentially sway the dollar against most currencies,
the conflict in Ukraine grabbed attention in an otherwise quiet
The euro fell to the day's low against the yen of
137.32 yen, and was last down 0.3 percent at 137.60. The single
currency also shed 0.1 percent against the Swiss franc to trade
at 1.2095 francs, not far from a 19-month low of
1.20865 francs struck on August 15.
The euro fell 0.1 percent against the dollar to trade at
$1.3264, as investors sold European stocks and sought
safety in top-notch German Bunds. The single currency was not
far from a 11-month low of $1.3242 struck on Thursday.
"The Ukraine headlines saw both the Swiss franc and the yen
rise, but gains have been relatively muted," said Alvin Tan,
currency strategist at Societe Generale. "The big mover, I
guess, will be Yellen's speech later in the day."
FOCUS ON YELLEN
The dollar index was steady at 82.194, having risen
as high as 82.364 on Thursday, a level last seen in early
September. It was still up 0.9 percent so far this week and on
track for its best weekly gain since January. Upbeat U.S.
housing data and hawkish-sounding Fed minutes have combined to
give the dollar a boost.
"Some of those who held long dollar positions before have
probably taken profits since yesterday," said Lutz Karpowitz,
currency strategist at Commerzbank.
He said those who missed the dollar rally are likely to hold
off now until there are fresh cues from an annual gathering of
central bankers at Jackson Hole, Wyoming, where Yellen will give
The topic of this year's symposium is "Re-Evaluating Labor
Last month, Yellen stressed there was significant slack in
labour markets, prompting markets to push back the timing of the
first interest rate hike. A dovish speech from Yellen would
counter this week's Fed minutes that showed policymakers
debating whether rates should be raised earlier or not.
This week's rally left the dollar on the verge of breaking
above its April peak of 104.13 yen, a move that could
open up the way to 105.45, set in January, traders said. The
dollar eased to 103.65 yen, still not that far from a 4-1/2
month high near 103.97 yen on Thursday.
"Anything remotely less dovish than expected from Yellen
should lift the dollar, and dollar/yen will be the front-runner
there," said Jesper Bargmann, head of trading for Nordea Bank in
One factor that could help temper gains in the dollar is the
lack of a significant rise in U.S. bond yields, analysts said.
The U.S. two-year Treasury yield last stood at around 0.46
percent. While the two-year yield has edged up from a
two-month low hit last Friday, it remains below a three-year
high of 0.59 percent touched in late July.
(additional reporting by Masayuki Kitano; Editing by Jeremy