September 16, 2019 / 8:17 AM / 2 months ago

FOREX-Oil-exporter currencies, safe havens rally after Saudi attacks

* Norway’s crown, Canadian dollar gain

* Oil importers Turkey, India see currencies weaken

* China’s industrial output slows, yuan falls

* Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh

By Tommy Wilkes

LONDON, Sept 16 (Reuters) - Currencies linked to the price of oil rose on Monday after an attack on Saudi Arabian refining facilities disrupted global oil supplies, while the Japanese yen and Swiss franc strengthened as nervous investors sought safety.

Oil prices surged nearly a fifth at one point following the strikes on two plants, which knocked out more than 5% of global oil production. Yemen’s Iran-aligned Houthi group claimed responsibility, but the United States blamed Iran.

The Norwegian crown surged as much as 0.7%, then settled at 8.964 crowns against the dollar, up 0.3% on the day. It was also 0.3% ahead versus the euro.

The Canadian dollar rose 0.2% to C$1.3259. The Russian rouble was also higher.

The currencies of oil importers such as Turkey and India underperformed.

Overall, the forex market reaction was limited. A bigger concern was that a supply-side shock and growing geopolitical tensions would damage an already fragile global economy, MUFG analyst Lee Hardman said.

“Downside risks for the global economy would intensify if geopolitical risks in the region continued to escalate, creating a more unfavourable environment for high beta emerging market and high yielding currencies,” he said.

The Japanese yen, a common choice for investors seeking shelter from market uncertainty, rose 0.2% to 107.85 yen per dollar. The Swiss franc rallied versus the euro but was only up 0.1% at 1.0959 by 0730 GMT, suggesting some calm had returned to markets.

The U.S. dollar slipped 0.1% against a basket of currencies . It was little changed versus the euro at $1.1079 .

CHINA WEAKNESS

In China, data released on Monday showed industrial output grew in August at its slowest pace in more than 17 years and retail sales rose less than expected. That added to pressure for stimulus, and in offshore trade the Chinese yuan weakened 0.3% to 7.0653 per dollar.

The market focus on Monday was the Middle East, but attention will also remain on central bank meetings in the United States and Japan. Expectations the Federal Reserve would cut interest rates on Wednesday had lessened; now investors are sure they’ll fall and are divided only over how much.

A third of economists polled by Reuters expect the Bank of Japan to announce ramped-up stimulus on Thursday. But sources say it may be a close call — policymakers will wait to assess market reaction to the Fed’s decision hours earlier.

Japanese markets are closed on Monday for a public holiday.

Sterling, which has soared over the past week on growing investor confidence that a no-deal Brexit is off the table, fell 0.3% to $1.2466. It was down 0.5% against the euro at 88.970. (Additional reporting by Tom Westbrook in Singapore; editing by Larry King)

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