Oil-exporter currencies and safe havens gain after Saudi attacks - CNBC

The U.S. dollar has regained some strength in recent weeks.

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Currencies linked to the price of oil rose on Monday after an attack on Saudi Arabian refining facilities disrupted global oil supplies, while the Japanese yen and Swiss franc strengthened as nervous investors sought safety.

Oil prices surged nearly a fifth following the strikes, which knocked out more than 5% of global oil production. Yemen's Iran-aligned Houthi group claimed responsibility, but the United States blamed Iran. President Donald Trump said Washington was "locked and loaded" to retaliate.

The Norwegian crown surged to 8.9215 per dollar and then settled at 8.9695 crowns, up 0.2% on the day. It was last 0.3% ahead versus the euro.

The Canadian dollar rose 0.2% to C$1.3264 after earlier reaching C$1.3208. The Russian rouble was 0.5% higher.

The currencies of oil importers such as Turkey and India weakened.

Overall, the forex market reaction was limited. A bigger concern was that a supply-side shock and growing geopolitical tensions would damage an already fragile global economy, MUFG analyst Lee Hardman said.

"Downside risks for the global economy would intensify if geopolitical risks in the region continued to escalate, creating a more unfavourable environment for high beta emerging market and high yielding currencies," he said.

The Japanese yen, a common choice for investors seeking shelter from market uncertainty, rose 0.4% to 107.71 yen per dollar. The Swiss franc gained versus the euro but was only up 0.2% at 1.0946.

The U.S. dollar recovered earlier losses and added 0.1% against a basket of currencies, with its index touching 98.343.

Speculators have trimmed their bullish bets on the dollar, the latest data from the Commodity Futures Trading Commission showed.

The euro dipped 0.2% to $1.1049.

CHINA WEAKNESS

In China, data released on Monday showed industrial output grew in August at its slowest pace in more than 17 years and retail sales rose less than expected. That added to pressure for stimulus, and in offshore trade the Chinese yuan weakened 0.3% to 7.0653 per dollar.

The market focus on Monday was the Middle East, but attention will also remain on central bank meetings in the United States and Japan, which follow the European Central Bank's stimulus package announced last week.

Investors expect the Federal Reserve to cut rates on Wednesday and will be looking for signals on further easing. A third of economists polled by Reuters expect the Bank of Japan to announce ramped-up stimulus on Thursday.

Japanese markets are closed on Monday for a public holiday.

Marshall Gittler, a strategist at ACLS Global, said the latest positioning data showed long positions on the yen had risen, probably because investors are betting on a worsening in the U.S.-China trade dispute despite easing tensions recently.

"JPY longs are getting to be relatively high, although not dangerously so. Nonetheless, theres plenty of room for them to be cut back further if U.S.-China trade tensions relax somewhat, as seems likely," Gittler said.

Sterling, which has soared over the past week on growing investor confidence that a no-deal Brexit is off the table, fell back from a two-month high to $1.2446, down 0.5% on the day. It fell 0.3% against the euro to 88.78 pence.

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