August 29, 2013 / 8:57 AM / 4 years ago

FOREX -Dollar rises vs yen as Syria concerns ease slightly

* Dollar rises vs yen as Syria tension eases
    * Emerging FX relief seen supporting case for Fed taper
    * US GDP and initial claims data in focus

    By Anooja Debnath
    LONDON, Aug 29 (Reuters) - The dollar rose against the
safe-haven yen on Thursday after a slight easing of tension
around Syria helped push U.S. Treasury yields higher.
    Market sentiment was still cautious, but the prospects of an
imminent Western attack on Syria over chemical weapons weakened,
given opposition in Britain and among U.S. lawmakers.
    U.S. Treasury yields, which fell in recent days as investors
sought refuge in low-risk government debt, rose, increasing the
dollar's appeal.   
    The dollar was up 0.6 percent at 98.19 yen,
recovering from Wednesday's trough of 96.81, which was its
lowest since August 12. It was up was up 0.4 percent
against a basket of currencies at 81.759.
    Some said the reduced tension in emerging markets assets
also supported the U.S. currency as it reinforced expectations
the U.S. Federal Reserve would begin to reduce monetary stimulus
    "A slight easing of the tensions in Syria and emerging
markets, has helped the dollar," said Simon Derrick head of
currency research at Bank of New York Mellon. 
    "The dollar being a safe haven depends on the circumstance.
Over the last few weeks tensions in emerging markets was seen as
keeping pressure on the U.S. Federal Reserve to delay tapering
which is dollar negative. With emerging markets now doing a
little better, the dollar is higher."
    Markets will be focusing on U.S. initial jobless claims
figures and the revision to growth figures from the second
quarter, with some traders saying they are positioning for
encouraging data and this is supporting the dollar. 
    Against the buoyant dollar, the euro was down 0.6
percent at $1.3268.
    "We expect the dollar to regain support against the majors
as risk aversion eases, allowing some stabilisation in risky
asset markets and potentially providing some relief to emerging
currencies. Safe-haven currencies (Swiss franc and yen) are
likely to come back under pressure as a result," analysts at
Morgan Stanley said.    
    First hit by outflows of funds as investors positioned for
an eventual end of Fed easy money, emerging market pain has been
exacerbated as tensions in Syria made investors even more risk
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