FOREX-Dollar falls, oil-exporter currencies rise after Saudi attacks; yen firms

* Attacks on Saudi oil facilities drive risk-off trade
* Dollar weakens as yen, oil-correlated currencies rise
* Fed, BoJ in focus later in the week

By Tom Westbrook
SINGAPORE, Sept 16 (Reuters) - The dollar fell while safe
havens and currencies of oil-producing countries rallied on
Monday, following an attack on Saudi Arabian refining facilities
that disrupted global oil supply and heightened Middle East
tensions.
Oil prices surged nearly a fifth at one point following the
strikes on two plants, including the world's biggest petroleum
processing facility in Abqaiq, which knocked out more than 5% of
global oil supply. Yemen's Iran-aligned Houthi group claimed responsibility for
the damage, but the U.S. has pointed the finger directly at
Iran. The Canadian dollar CAD=D3 rose 0.4% to 1.3233 per dollar.
The Norwegian krone NOK= rose 0.5% to 8.9363 per dollar. Both
currencies often move together with the oil price because the
countries are major oil exporters.
In India, a major importer of crude, the rupee INR= fell
almost 0.7%.
"The natural flow through of higher (oil) prices has seen
the NOK and the CAD outperform, and we'll probable see a better
feel towards the (Russian) rouble later on," said Chris Weston,
head of research at brokerage Pepperstone Group in Melbourne.
The attacks reversed last week's ebullient risk appetite and
prompted U.S. President Donald Trump to tweet that the United
States was "locked and loaded" for a response.
"We've got a beady eye on this and we're prepared to pile
back in to the Japanese yen after last week's repositioning,"
Weston said, adding that while trade was calm, the strikes
presented another geopolitical "what if" to vex markets.
The safe-haven Japanese yen and Swiss franc both firmed. The
yen JPY=EBS rose 0.3% to 107.79 per dollar and the franc rose
0.4% CHF= to $0.9883. Gold XAU= jumped by 1%.
Against a basket of currencies .DXY the dollar edged lower
to 98.162.
Beyond oil, currency markets are awaiting the outcome of
central bank meetings in the U.S. and Japan this week and
economic data in Australia and New Zealand that could determine
the rates outlook in the Antipodes.
"Geopolitical risks and central bank rhetoric remain key
drivers of risk this week," Australia and New Zealand Banking
Group analysts said in a note.
On the Brexit front, British Prime Minister Boris Johnson's
confidence of sealing a deal to leave the European Union by Oct.
31 applied renewed pressure to the pound. Sterling GBP=D3 fell 0.3 from a seven-week high to hit
$1.2486.
While much of the risk appetite on display last week was
driven by signs of a thaw in U.S.-China trade tensions, few
fresh indications of progress left sentiment fragile.
Data released on Monday showed the slowdown in China's
economy deepened in August, with industrial production growing
at its weakest pace in 17-1/2 years and retail sales weaker than
anticipated.
That added to pressure for stimulus and in offshore trade
the Chinese yuan CNH= weakened 0.25% to 7.0631 per dollar.
In the United States, investors who had begun trimming
expectations for a U.S. Federal Reserve rate cut on Wednesday
are now certain rates will fall and divided only over how much.
FEDWATCH
As for the Bank of Japan's policy decision on Thursday, a
third of economists polled by Reuters expect stimulus to be
ramped up. But sources say it may be a close call as
policymakers wait till the last minute to assess market reaction
to the Fed's decision hours earlier. Japanese markets are closed on Monday for a public holiday.
The euro EUR=D3 was steady at $1.1073.