FOREX-Oil currencies, dollar buoyed as Saudi attacks keep crude elevated

* Norwegian crown, Russian rouble early gainer from Saudi
attacks
* Dollar broadly supported as investors look to Fed
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Hideyuki Sano
TOKYO, Sept 17 (Reuters) - Oil exporter currencies held firm
while the dollar found broad support as recent attacks on Saudi
oil facilities and the threat of military action in the region
kept crude prices kept prices elevated.
"Aside from big moves in oil prices, currencies and bonds
are relatively calm, as investors are still trying to gauge the
extent of political risks," said Kyosuke Suzuki, director of
forex at Societe Generale.
Attacks on crude facilities in Saudi Arabia on the weekend
boosted oil prices by nearly 15% on Monday, with international
benchmark Brent logging its biggest jump in over 30 years. On
Tuesday, prices pulled back slightly but remained at lofty
levels. O/R
Yemen's anti-government Houthi movement, an ally of Iran,
claimed responsibility for the attack that cut the kingdom's
production in half and fanned fears of retaliation in the Middle
East.
U.S. President Donald Trump said on Monday said it looked
like Iran was behind the attacks but stressed he did not want to
go to war. Iran has rejected U.S. charges it was behind the
drone strikes on Saturday.
The Norwegian crown gained almost 1% against the euro on
Monday to trade at 9.8565 to the euro EURNOK= while the
Russian rouble EURRUBTN=MCX hit a near seven-week high on the
euro.
Reactions among major currencies were more muted, with the
yen and the Swiss franc quickly giving up early gains made on
Monday on knee-jerk safe-haven buying.
Against the yen the dollar traded at 108.11 yen JPY= , just
below last week's high of 108.265, its highest level since Aug.
1.
A major resistance is seen at 108.43, the dollar's
50%retracement from its decline from April to August.
The euro stood at $1.10045 EUR= , having shed 0.6% on
Monday and the Swiss franc also weakened 0.3% to 0.9925 to the
dollar CHF= .
"The way currencies will react to tensions in the Middle
East is not clear-cut. While the yen tends to gain on
geopolitical concerns, the dollar is bought when something
serious happens," Yukio Ishizuki, senior strategist at Daiwa
Securities.
The dollar index =USD rose almost 0.5% on Monday and last
stood at 98.624.
Another factor boosting the greenback was some exiting of
bearish dollar bets in advance of the U.S. Federal Reserve's
two-day policy meeting. Traders widely expect the Fed will cut
interest rates by a quarter of a percentage point this week.
The Federal Reserve is expected to cut interest rates by
0.25 percentage point on Wednesday.
"Markets are pricing in two additional rate cuts by next
year but the Fed is unlikely to make such a forecast, so we
could see further gain in the dollar," said Daiwa's Ishizuki.