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FOREX-Oil-exporter currencies, safe havens rally after Saudi attacks

Mon, 16th Sep 2019 09:17

* Norway's crown, Canadian dollar gain

* Oil importers Turkey, India see currencies weaken

* China's industrial output slows, yuan falls

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Tommy Wilkes

LONDON, Sept 16 (Reuters) - Currencies linked to the priceof oil rose on Monday after an attack on Saudi Arabian refiningfacilities disrupted global oil supplies, while the Japanese yenand Swiss franc strengthened as nervous investors sought safety.

Oil prices surged nearly a fifth at one point following thestrikes on two plants, which knocked out more than 5% of globaloil production. Yemen's Iran-aligned Houthi groupclaimed responsibility, but the United States blamed Iran.

The Norwegian crown surged as much as 0.7%, then settled at8.964 crowns against the dollar, up 0.3% on the day. Itwas also 0.3% ahead versus the euro.

The Canadian dollar rose 0.2% to C$1.3259. TheRussian rouble was also higher.

The currencies of oil importers such as Turkey andIndia underperformed.

Overall, the forex market reaction was limited. A biggerconcern was that a supply-side shock and growing geopoliticaltensions would damage an already fragile global economy, MUFGanalyst Lee Hardman said.

"Downside risks for the global economy would intensify ifgeopolitical risks in the region continued to escalate, creatinga more unfavourable environment for high beta emerging marketand high yielding currencies," he said.

The Japanese yen, a common choice for investors seekingshelter from market uncertainty, rose 0.2% to 107.85 yen perdollar. The Swiss franc rallied versus the euro butwas only up 0.1% at 1.0959 by 0730 GMT, suggestingsome calm had returned to markets.

The U.S. dollar slipped 0.1% against a basket of currencies. It was little changed versus the euro at $1.1079.

CHINA WEAKNESS

In China, data released on Monday showed industrial outputgrew in August at its slowest pace in more than 17 years andretail sales rose less than expected. That added topressure for stimulus, and in offshore trade the Chinese yuanweakened 0.3% to 7.0653 per dollar.

The market focus on Monday was the Middle East, butattention will also remain on central bank meetings in theUnited States and Japan. Expectations the Federal Reserve wouldcut interest rates on Wednesday had lessened; now investors aresure they'll fall and are divided only over how much.

A third of economists polled by Reuters expect the Bank ofJapan to announce ramped-up stimulus on Thursday. But sourcessay it may be a close call -- policymakers will wait to assessmarket reaction to the Fed's decision hours earlier.

Japanese markets are closed on Monday for a public holiday.

Sterling, which has soared over the past week on growinginvestor confidence that a no-deal Brexit is off the table, fell0.3% to $1.2466. It was down 0.5% against the euro at88.970.(Additional reporting by Tom Westbrook in Singapore; editing byLarry King)

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