August 27, 2013 / 6:23 PM / 4 years ago

FOREX-Yen, Swiss franc jump as Syria conflict spurs safety bid

* Yen sharply higher vs Australian and New Zealand dollars
    * Swiss franc also rises versus euro, dollar
    * Emerging market currencies in rout on Syria tension
    * German IFO survey has little impact on euro/dollar

    By Julie Haviv
    NEW YORK, Aug 27 (Reuters) - The safe-haven yen and Swiss
franc gained on Tuesday and riskier currencies like the
Australian and New Zealand dollars fell, with Western countries
poised to take military action against the Syrian government.
    Western powers told the Syrian opposition to expect a strike
against President Bashar al-Assad's forces within days,
according to sources who attended a meeting between envoys and
the Syrian National Coalition in Istanbul. 
    That news trumped economic reports that would have typically
fostered risk taking, such as an upbeat German business
sentiment survey.  
    "It seems that today is a good old risk off day due to
Syria," said Charles St-Arnaud, foreign exchange strategist at
Nomura Securities in New York.
    "This explains why the yen has been outperforming the dollar
and why the dollar has been outperforming most other currencies,
especially the Australian dollar, New Zealand dollar and
emerging market currencies," he said. 
    The dollar fell 1.4 percent versus the yen to 97.12 yen
, pulling away from a near three-week high of 99.15 yen
set on Friday. The euro also struggled against the yen, falling
1.2 percent to 130.04 yen.
    The dollar fell 0.6 percent against the Swiss franc 
to 0.9178 franc, while the euro was down 0.5 percent at 1.2286
    "Investors are unwinding carry trades as the growing risk of
an international response to Syria drove all of the major
currencies lower against the U.S. dollar and Japanese yen," said
Kathy Lien, managing director, at BK Asset Management in New
    The Swiss franc and the yen usually climb in times of
financial market stress and geopolitical uncertainty, while
growth-linked higher-yielding currencies sell off.
    In the case of the dollar, the greenback was bought against
emerging market currencies.
    German, U.S. and British government bond prices all rose as
money flowed into safe-haven markets. Stocks 
were sharply lower, as were emerging market assets.
    The growth-linked Australian dollar was down 0.7
percent at US$0.8964, while against the yen it lost nearly 2.0
percent to 87.20 yen. The New Zealand dollar fell 2.0
percent against the yen to 75.78 yen.   
    Washington said on Monday it believed Syrian President
Bashar al-Assad was responsible for a chemical weapons attack on
civilians last week in what U.S. Secretary of State John Kerry
called a "moral obscenity." 
    Emerging market currencies tumbled, with the Indian rupee
hitting a record low and the Russian rouble, the Indonesian
rupiah and a host of others recording multi-year troughs.
    The rising tension stemming from Syria overshadowed the
impact from positive data from the euro zone and United States.
    The IFO German confidence survey showed business sentiment
was at its highest level in 16 months, but that had only a
fleeting impact on the euro. 
    In the United States, consumer confidence improved this
month, while home prices rose in June on a seasonally adjusted
basis, according to the S&P/Case Shiller composite index of 20
metropolitan areas. 
    The euro was last up 0.2 percent against the dollar at
    Disappointing U.S. data in the past two trading sessions,
including a report that highlighted the fragility of the housing
sector, have weighed on the dollar, although buying at lower
levels has checked sharp losses.
    The dollar index, which tracks the greenback against
a basket of six major currencies, was last down 0.3 percent at
81.154, according to Reuters data.

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