January 8, 2020 / 3:05 PM / 19 days ago

FOREX-Yen, Swiss franc drop from highs as markets stabilize after Iran strike

    * Iran fires missiles at U.S.-led forces in Iraq 
    * Japanese yen jumps to three-month high before retreating
    * Focus on Trump's statement after Iran move
    * U.S. ADP report shows private sector job gains in December
    * Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh

 (Adds new comment, FX table, U.S. data, updates prices, changes byline, dateline; previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Jan 8 (Reuters) - The safe-haven yen fell from three-month highs against the dollar on
Wednesday, as investors grew more optimistic that Iran's attack on U.S. forces in Iraq overnight was
unlikely to escalate into a full-blown regional conflict.
    Another safe haven, the Swiss franc, also pared gains that took it to a more than one-week peak versus
the greenback earlier in the global session. Gold also gave up earlier gains as did crude oil.
    Traders said the focus would now turn to what response, if any, the United States is planning.
    Iran said it had fired missiles at U.S. targets in Iraq on Wednesday in retaliation for last week's
U.S. drone strike that killed Iranian commander Qassem Soleimani, stoking fears of a new war in the Middle
    However, Twitter posts from both sides playing down the prospect of further escalation helped calm
currency markets.    
    U.S. President Donald Trump tweeted that a damage assessment was "So far, so good!" and said "all is
well," promising a further statement later on Wednesday. Iranian Foreign Minister Mohammad Javad Zarif
tweeted that the attack was "proportionate" and that "we do not seek escalation or war."
    "The markets tend to exaggerate geopolitical developments," said Marc Chandler, chief market
strategist at Bannockburn Global Forex in New York. "I do think that this is a relief rally and sort of
the mirror image of the knee-jerk sell-off that we saw last week."
    The yen, regarded as a safe haven in times of geopolitical turmoil due to its liquidity and Japan's
current account surplus, slipped, pushing the dollar up 0.2% at 108.71 yen. The dollar earlier
dropped to a three-month low of 107.66 yen following Iran's strike. 
    The dollar was little changed against the Swiss franc, at 0.9702 franc, after falling to a more than
one-week trough earlier in the global session. 
    A higher-than-expected U.S. private payrolls number for December also boosted the dollar, with the
dollar index rising 0.1% to 97.134.
    The ADP National Employment Report on Wednesday showed private payrolls jumped by 202,000 jobs last
month after an upwardly revised 124,000 gain in November. Economists polled by Reuters had forecast
private payrolls advancing 160,000 last month following a previously reported 67,000 rise in November.

    "The market still has the ultimate ballast, or anchor, which is the U.S. economy," said Bannockburn's
Chandler. "Even though there's some variance month-to-month between the ADP and the non-farm payrolls
report, the ADP is still a good indicator of the underlying trend."
    The euro was down 0.3% at $1.1124, hovering near session lows.
    Currency bid prices at 9:47AM (1447 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1119        $1.1151     -0.29%         -0.81%      +1.1168     +1.1112
 Dollar/Yen       JPY=        108.6900       108.4200    +0.25%         -0.16%      +108.8100   +107.6600
 Euro/Yen         EURJPY=     120.87         120.94      -0.06%         -0.89%      +121.0300   +120.1800
 Dollar/Swiss     CHF=        0.9699         0.9701      -0.02%         +0.22%      +0.9727     +0.9666
 Sterling/Dollar  GBP=        1.3121         1.3123      -0.02%         -1.04%      +1.3169     +1.3082
 Dollar/Canadian  CAD=        1.3018         1.3003      +0.12%         +0.22%      +1.3024     +1.2976
 Australian/Doll  AUD=        0.6857         0.6868      -0.16%         -2.34%      +0.6885     +0.6851
 Euro/Swiss       EURCHF=     1.0786         1.0820      -0.31%         -0.61%      +1.0828     +1.0786
 Euro/Sterling    EURGBP=     0.8473         0.8496      -0.27%         +0.22%      +0.8516     +0.8456
 NZ               NZD=        0.6632         0.6640      -0.12%         -1.54%      +0.6672     +0.6619
 Dollar/Norway    NOK=        8.8531         8.8522      +0.01%         +0.85%      +8.8687     +8.8338
 Euro/Norway      EURNOK=     9.8453         9.8757      -0.31%         +0.08%      +9.8980     +9.8451
 Dollar/Sweden    SEK=        9.4513         9.4506      -0.32%         +1.11%      +9.4765     +9.4240
 Euro/Sweden      EURSEK=     10.5109        10.5451     -0.32%         +0.40%      +10.5767    +10.5040

 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Dhara Ranasinghe in London)
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