* Iran strikes at bases hosting U.S. forces in Iraq
* Yen jumps to three-month peak, then retreats
* Trump tweets: 'All is well!'
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Tom Westbrook
SINGAPORE, Jan 8 (Reuters) - Currencies turned volatile on
Wednesday as the safe-haven yen first jumped on news of Iranian
missile strikes on bases hosting U.S. troops in Iraq, before
retreating as investors wagered it would not trigger a wider
conflict in the region.
More than a dozen ballistic missiles shot through the night
from Iranian territory toward the two Iraqi military bases, the
U.S. military said. Iran's Islamic Revolutionary Guards Corps said they fired
them to retaliate for last week's killing of commander Qassem
Soleimani, according to a statement on state TV.
That sent the yen to a three-month high, before settling
back as the absence of immediate reports of casualties steadied
nerves. Twitter posts from both sides playing down the prospect
of further escalation also helped calm the currency market.
U.S. President Donald Trump tweeted that a damage
assessment was "So far, so good!" and said "all is well,"
promising a further statement on Wednesday morning. Iranian
Foreign Minister Mohammad Javad Zarif Tweeted that the attack
was "proportionate" and that "we do not seek escalation or war."
The yen JPY= , regarded as a haven in times of turmoil by
virtue of Japan's status as the world's biggest creditor, had
leapt as much as 0.8% to 107.63 per dollar. But by midsession,
it was back only a little above where it began the day.
"If the market was really worried that the end of the world
was nigh, dollar/yen would have collapsed, and that's clearly
not been the case," said Stuart Oakley, global head of flow FX
at Nomura in Singapore.
The Swiss franc CHF= similarly gave back gains and so did
gold to a lesser extent, though the precious metal still sat at
an almost seven-year high XAU= , just below $1600 per ounce.
GOL/
Investors focus will now be on what response, if any, the
United States is planning.
"Essentially people are betting that this is not going to be
our main focus three months from now," said Westpac analyst Sean
Callow.
Oil prices, which initially jumped, fell back as analysts
said market tension could ease as long as oil production
facilities remain unaffected by attacks. O/R
China's yuan CNH= , by afternoon, held on to most of
Tuesday's steep gains at 6.9418 per dollar, after a bumpy ride.
Elsewhere, the dollar gave back a little bit of its
overnight gains on other major currencies, falling about 0.1%
against the Aussie AUD=D3 , kiwi NZD=D3 and pound GBP= .
The greenback had been buoyed overnight by a strong showing
in a non-manufacturing business survey.