FOREX-Mideast tensions send yen to three-month peak

* Safe havens extend gains as Mideast tensions rise
* Yen hits three-month high
* Gold surges to highest since 2013
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Tom Westbrook
SINGAPORE, Jan 6 (Reuters) - The safe-haven Japanese yen hit
a three-month high on Monday, while gold soared as increasing
tensions between Iran and the United States sent investors
scurrying to less risky assets.
The United States detected a heightened state of alert by
Iran's missile forces, while President Donald Trump warned of a
"major retaliation" if Iran hit back.
Iraq's parliament on Sunday recommended all foreign troops
be ordered out of the country and Iran said it would abandon
limits on uranium enrichment, after the U.S. killing of a top
Iranian commander and an Iraqi militia leader in Baghdad.
"I think markets are going to remain pretty nervous on
potential Iranian retaliation and what Trump might do next,"
said National Australia Bank's head of FX strategy, Ray Attrill.
The yen JPY= , regarded as a haven in times of market
turmoil by virtue of Japan's status as the world's biggest
creditor, rose 0.3% to 107.82 per dollar early in Asian trade,
its strongest since October 2019.
It handed back some of those gains later, as investors
waited for an Iranian response.
"It's a wait-and-see but it's very tense," said Sean
MacLean, research strategist at Pepperstone, a brokerage in
Melbourne.
The Swiss franc CHF= rose 0.2% to 0.9707 francs per
dollar, while the euro EUR= and pound GBP= were steady.
Spot gold leapt as much as 1.8%, or $28 per ounce, in early
Asian trade to an almost seven-year high of $1,579.55 XAU= .
Oil rose on fears any conflict in the region could disrupt
global supplies. O/R
The dollar gained against riskier currencies such as the
Aussie AUD=D3 and the kiwi NZD=D3 . Against a basket of
currencies .DXY the greenback steadied at 96.827.
The moves extended a flight to safety that began on Friday,
after Iranian Major-General Qassem Soleimani was killed on
Friday in a U.S. drone strike on his convoy at Baghdad airport.
The attack carried U.S.-Iranian hostilities into uncharted
waters and stoked concern about a major conflagration.
The Australian dollar/yen pair - a gauge of risk sentiment
because the Aussie is a trade-exposed, export-oriented currency
compared with the yen's safety status, has been the biggest
mover, with the yen rising 1.3% since Friday. AUDJPY=
U.S. Secretary of State Mike Pompeo said Washington would
target any Iranian decision-makers it chose if there were
further attacks on U.S. interests by Iranian forces or their
proxies.
The European Union, Britain and Oman, meanwhile, urged the
two sides to make diplomatic efforts to defuse the crisis.
"The probability of an interruption in oil supply due to
potential retaliatory measures by Iran has been increasing
significantly for several days," said Marc-André Fongern,Head of
FX Research at trade finance broker MAF Global Forex.
"A diplomatic resolution is imperative, but the Iranian
government's rhetoric remains uncompromisingly harsh."
Besides Iran's reply, investors are also looking to U.S.
data this week after a disappointing manufacturing readout on
Friday.
Service sector surveys in Europe, China and the U.S. due
later on Monday and a U.S. non-manufacturing survey due on
Tuesday are all in focus. So too are November trade,
construction approvals and retail figures for Australia through
the week, ahead of a central bank meeting in a month.