* Japanese yen falls to two-week low
* Dollar index up, investors focus on U.S. non-farm payrolls
* Chinese yuan rises to five-month high vs dollar
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Adds new comment, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, Jan 9 (Reuters) - The safe-haven yen fell to two-week lows against the dollar on Thursday,
as the United States and Iran moved away from an all-out conflict, prompting investors to take on more
risk and shift focus to an upcoming U.S.-China trade deal and a U.S. non-farm payrolls report.
U.S. President Donald Trump responded to an Iranian attack on U.S. forces with sanctions, not
violence. Iran offered no immediate signal it would retaliate further against a Jan. 3 U.S. drone strike
that killed its senior military commander. "After yesterday's press conference and after it looked like Iran was not trying to escalate things,
we are now getting back to the status quo that we saw before the Iran situation," said John Doyle, vice
president of dealing and trading, at Tempus Inc in Washington.
The yen, a safe haven in times of geopolitical turmoil because of its deep liquidity and Japan's
current account surplus, reversed gains against the dollar after Iran's missile strike. The dollar was
last up 0.4% at 109.51 yen JPY= , after hitting 109.57 yen, its highest since Dec. 27.
Gold prices retreated further from a near-seven-year peak scaled in the previous session. Implied volatility gauges for euro/dollar are falling back toward late 2019 lows, according to Reuters
analysts. Three-month implied volatility in euro/dollar fell to 4.27% at the end of November, its lowest level
on record.
Focus is expected to shift back to the global economy, with expectations the United States and China
will sign a trade deal next week providing underlying support for risk assets. Investors think the deal will clear one of the world economy's biggest uncertainties and help boost
global growth this year, although some think that view is too optimistic.
Market participants are also looking ahead to Friday's U.S. non-farm payrolls report, with forecasts
of 164,000 new jobs in December, from 266,000 the previous month.
"The forecast of 160,000 jobs or so is not a big number so I think there is a little room for an
upside surprise," said Tempus' Doyle. "I will be looking at November's number of 266,00 - whether that
will be revised."
In other currencies, China's yuan rose to a five-month high of 6.9175 against the dollar overnight in
the offshore market CNH=EBS , boosted by a steady inflation readout.
In afternoon trading, the dollar index was 0.1% higher on the day at 97.433 .DXY .
The Swiss franc was little changed against the dollar, which was last at 0.9734 franc CHF= .
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Currency bid prices at 3:36PM (2036 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1106 $1.1103 +0.03% -0.93% +1.1120 +1.1094
Dollar/Yen JPY= 109.5200 109.1200 +0.37% +0.61% +109.5700 +109.0200
Euro/Yen EURJPY= 121.63 121.17 +0.38% -0.26% +121.6900 +121.1400
Dollar/Swiss CHF= 0.9733 0.9737 -0.04% +0.57% +0.9747 +0.9712
Sterling/Dollar GBP= 1.3065 1.3097 -0.24% -1.46% +1.3124 +1.3014
Dollar/Canadian CAD= 1.3063 1.3037 +0.20% +0.59% +1.3104 +1.3026
Australian/Doll AUD= 0.6854 0.6865 -0.16% -2.38% +0.6880 +0.6851
ar
Euro/Swiss EURCHF= 1.0812 1.0813 -0.01% -0.37% +1.0833 +1.0796
Euro/Sterling EURGBP= 0.8499 0.8478 +0.25% +0.52% +0.8533 +0.8472
NZ NZD= 0.6609 0.6646 -0.56% -1.89% +0.6658 +0.6601
Dollar/Dollar
Dollar/Norway NOK= 8.8825 8.8683 +0.16% +1.19% +8.9024 +8.8550
Euro/Norway EURNOK= 9.8649 9.8523 +0.13% +0.27% +9.8854 +9.8397
Dollar/Sweden SEK= 9.4933 9.4593 +0.36% +1.56% +9.5007 +9.4444
Euro/Sweden EURSEK= 10.5433 10.5060 +0.36% +0.71% +10.5482 +10.4969