* Japanese yen rises to 3-month high vs dollar
* Oil currencies not impacted yet despite oil price spike
* Markets in wait-and-see mode on next U.S., Iran move
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Adds analyst's comment, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, Jan 6 (Reuters) - The dollar rallied against the safe-haven Japanese yen on Monday, but
stayed weaker versus the Swiss franc, as market sentiment remained cautious amid concerns about a broader
escalation of Mideast conflicts after the United States killed Iran's most prominent military commander.
The yen and Swiss franc gained earlier in the session, extending a flight to safety that began on
Friday after Iranian Major-General Qassem Soleimani was killed in a U.S. drone strike on his convoy at
Baghdad airport. That rally, however, has lost some steam.
"On the technical side, the yen has been strengthening even before the Iran thing so that play may be
overdone below 108 yen and we're seeing the dollar coming back toward 109 yen," said John Doyle, vice
president of dealing and trading at Tempus Inc in Washington.
"With something like this big, the major knee-jerk risk-off move is often short-lived and that's
basically what we're seeing now. Equities basically are back flat and that correlates well with
dollar/yen," he added.
U.S. President Donald Trump warned of a "major retaliation" if Iran hit back, while Iran's replacement
commander vowed to expel the United States from the region. On Sunday, Iran further distanced itself from the 2015 nuclear agreement with world powers, which the
United States withdrew from in 2018, saying it would continue to cooperate with the United Nations nuclear
watchdog but would respect no limits to its uranium enrichment work. The yen surged on Monday to a three-month high around 107.75 versus the U.S. dollar, but was last down
on the day as the greenback strengthened to 108.44 yen JPY= , up 0.2%.
The Swiss franc, another safe-haven currency, rose against the dollar, which fell 0.3% to 0.9690 franc
CHF= .
The dollar index was down 0.2% at 96.674 .DXY .
The greenback is sometimes seen as a safe-haven asset given that most central banks hold it as their
main reserve currency and a big chunk of global companies trade using dollars, but the yen and the franc
represent a more traditional safe-haven bet.
Implied volatility gauges in euro/dollar, the most traded currency pair, on the other hand, were
relatively calm, suggesting investors are not yet fleeing to add protection to their portfolios by buying
currency options.
A currency volatility index developed by Deutsche Bank was only marginally up and still close to its
record lows. .DBCVIX
Currencies sensitive to global risk appetite were weaker, including the Australian dollar, New Zealand
dollar and Swedish crown.
The British pound was trading up 0.6% at $1.3158 GBP=D3 ahead of a crucial week when British
lawmakers are due to reconvene to debate the Brexit deal Prime Minister Boris Johnson has agreed with
Brussels.
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Currency bid prices at 3:37 PM (2037 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1190 $1.1158 +0.29% -0.18% +1.1206 +1.1157
Dollar/Yen JPY= 108.4000 108.0800 +0.30% -0.40% +108.5000 +107.7800
Euro/Yen EURJPY= 121.32 120.60 +0.60% -0.52% +121.3900 +120.2900
Dollar/Swiss CHF= 0.9687 0.9725 -0.39% +0.09% +0.9717 +0.9677
Sterling/Dollar GBP= 1.3160 1.3086 +0.57% -0.75% +1.3174 +1.3065
Dollar/Canadian CAD= 1.2967 1.2999 -0.25% -0.15% +1.2990 +1.2960
Australian/Doll AUD= 0.6933 0.6951 -0.26% -1.25% +0.6957 +0.6926
ar
Euro/Swiss EURCHF= 1.0841 1.0846 -0.05% -0.10% +1.0859 +1.0833
Euro/Sterling EURGBP= 0.8501 0.8530 -0.34% +0.56% +0.8545 +0.8493
NZ NZD= 0.6668 0.6663 +0.08% -1.01% +0.6680 +0.6645
Dollar/Dollar
Dollar/Norway NOK= 8.8003 8.8384 -0.43% +0.25% +8.8545 +8.7869
Euro/Norway EURNOK= 9.8488 9.8615 -0.13% +0.11% +9.8835 +9.8427
Dollar/Sweden SEK= 9.4085 9.3961 +0.39% +0.65% +9.4353 +9.3888
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Currency volatility index close to record lows https://tmsnrt.rs/2SSaogq
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