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Syria Tensions Buoy Yen, Swiss Franc while Riskier Currencies Fall - (Reuters)

Posted by Chris Advincula on Aug 27, 2013 7:28:00 AM

* Yen sharply higher vs Australian and New Zealand dollars

    * Swiss also franc rises versus euro, dollar

    * Emerging market currencies in rout on Syria tension

    * German IFO survey has little impact on euro/dollar

 

 

    By Anirban Nag

    LONDON, Aug 27 (Reuters) - The safe-haven yen and Swiss

franc gained on Tuesday and riskier currencies like the

Australian dollar fell as geopolitical tensions rose with the

West appearing to edge towards military action against the

Syrian government.

    The dollar extended losses to fall 0.8 percent versus the

yen to 97.70 yen, pulling away from a near three-week

high of 99.15 yen set on Friday on EBS.

    The dollar fell 0.2 percent against Swiss franc to

0.9215 francs, while the euro was down 0.4 percent at 1.2296

francs.

    German, U.S. and British government bond prices all rose as

money flowed in to safe-haven markets. On the other hand, stocks

 were lower as were emerging market assets.

    "We are seeing some safe-haven bids because of the Syrian

issue and that is driving the Aussie and the kiwi lower," said

Daragh Maher, currency strategist at HSBC.

    The growth-linked Australian dollar was down 0.9

percent at $0.8950 while against the yen it lost 1.7 percent to

87.45 yen. The New Zealand dollar fell 1.6 percent

against the yen to 76.05 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."

    The Swiss franc and the yen usually climb in times of

financial market stress and economic uncertainty while

growth-linked higher-yielding currencies are sold off.

    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 on the euro.

    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.

    "IFO beat expectations with both the current assessment and

forward-looking expectations better than expected," said Elsa

Lignos, senior currency strategist at RBC Capital." The effect

was lost in the general safe haven rally, taking euro/dollar

down to a low of $1.3322."

    The euro was last down 0.2 against the dollar at

$1.3340 while it was down 1 percent against the yen at

130.31 yen. Its losses against the yen were mainly due to

worries about Syria, traders said.

    Data due later from the United States includes the

Case-Shiller house price index, consumer confidence and the

Richmond Fed survey.

    Disappointing U.S. data in the past two trading sessions,

including one which highlighted the fragility of the housing

sector, have weighed on the dollar, although buying at

lower levels has checked sharp losses.

 

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