FOREX-Swiss franc and yen in holding pattern, markets await Iran response

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Safe-haven Swiss franc up on rising Mideast tensions
* Yen pulls back from three-month high but mood is cautious
* Gold surges to highest since 2013

By Stanley White
TOKYO, Jan 7 (Reuters) - The Swiss franc held gains against
the dollar on Tuesday as traders sought save-havens amid
heightened anxiety about potential Iranian retaliation to a U.S.
drone strike that killed its most prominent military commander.
The yen, another safe-haven currency, pulled back from a
three-month high versus the dollar, but sentiment remains
fragile due to the increasing worries about armed conflict
between the United States and Iran.
Highlighting the concerns, the U.S. currency nursed losses
against sterling and the euro as the emergence of a new
geopolitical flashpoint led some investors to reassess their
tolerance for risk at the start of the new year.
The United States has denied Iranian Foreign Minister
Mohammad Javad Zarif a visa to travel to New York for a United
Nations Security Council meeting on Thursday, according to a
U.S. official, raising questions about what steps Iran will take
next. "Sentiment clearly favours risk-off trades, but dollar/yen
is not falling much because Japanese importers are buying," said
Yukio Ishizuki, foreign exchange strategist at Daiwa Securities
in Tokyo.
"Excluding this real demand, the dollar is weak against
other currencies. This reflects the situation in the Mid-East,
but we need to see what happens next."
Against the dollar, the Swiss franc CHF=EBS was quoted at
0.9693 following a 0.5% jump on Monday toward its highest level
in more than a year.
The yen JPY=EBS was steady at 108.48 per dollar, off a
three-month high of 107.77 touched on Monday.
The dollar index .DXY against a basket of six major
currencies stood at 96.667, following a 0.2% decline on Monday.
The United States has no plans to pull its troops out of
Iraq, Defense Secretary Mark Esper said on Monday, following
reports of a U.S. military letter informing Iraq officials about
the repositioning of troops in preparation to leave.
This came after Friday's drone strike in Baghdad ordered by
U.S. President Donald Trump that killed Iranian military
commander Qassem Soleimani, widely seen as Iran's second most
powerful figure behind Supreme Leader Ayatollah Ali Khamenei.
The U.S. government says Soleimani was actively developing
plans to attack U.S. interests in Iraq and the Middle East.
Iran's leaders have promised to avenge the killing. Elsewhere in the currency market, the pound GDP=D3 traded
at $1.3174, following a 0.7% jump on Monday. The euro EUR=D3
was quoted at $1.1192 after a 0.4% gain in the previous session.
The onshore yuan CNY=CFXS rose to a five-month high of
6.9522 per dollar in another sign that some traders were willing
to temporarily put aside concerns about a flare up between the
United States and Iran.
The United States and China are expected to sign a
preliminary deal on Jan. 15 to de-escalate a prolonged trade
war.
The trade deal would relieve pressure on a stuttering global
economy, but rising geopolitical risks threaten to overshadow
the benefits of reduced trade friction.
Investors also await data due later on Tuesday on the U.S.
trade balance, factory orders, and the services sector to
measure the health of the world's largest economy.