FOREX-Dollar edges higher but outlook wary

Reuters

* Swiss franc, Japanese yen remain supported
* Leveraged trades under stress after Wednesday moves
* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh

By Saikat ChatterjeeLONDON, Aug 10 (Reuters) - The dollar rose against a
trade-weighted basket of currencies on Thursday as investors
consolidated positions with the low-yielding Swiss franc and
Japanese yen supported amid deepending anxiety over tensions
between the United States and North Korea.
"The markets are looking for direction after Wednesday's
sharp moves and geopolitical concerns will dominate investor
mindsets in the coming days," said Esther Maria Reichelt, an FX
strategist at Commerzbank in Frankfurt.
The dollar index <.DXY> was trading 0.2 percent up at 93.73.
It hit a 15-month low of 92.548 on August 2.
The Swiss franc and Japanese yen had notched
up impressive gains against the dollar on Wednesday after U.S.
President Donald Trump warned North Korea that it would face
"fire and fury" if it threatened the United States.
That prompted North Korea to say it was considering firing
missiles at Guam, a U.S. Pacific island territory. [nL4N1KV6U0]
The jump in the franc had prompted hedge funds to unwind
leveraged positions which involved borrowing in the weak Swiss
currency and investing the proceeds in the relatively
higher-yielding Australian dollar and the Canadian
dollar .
The Swiss franc and Japanese yen are often sought in times
of geopolitical tension or global financial stress, partly
because both countries have big current account surpluses.
Japan is the world's biggest creditor nation and there is an
assumption Japanese investors may repatriate their foreign
holdings in times of heightened global uncertainty.
The euro edged 0.3 percent lower to 1.1726 against the
dollar. It has weakened 1.5 percent since hitting a 2-1/2 year
high of 1.1910 on Aug. 2.
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets

(Reporting by Saikat Chatterjee; Additional reporting by
Masayuki Kitano in SINGAPORE)
((saikat.chatterjee@thomsonreuters.com; +44-20-7542-1713;
Reuters Messaging: saikat.chatterjee.reuters.com@reuters.net))

Keywords: GLOBAL FOREX/ (UPDATE 2)
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