Dollar inches lower versus yen and Swiss franc amid Iran sanctions

New York

THE US dollar edged lower from four-week highs against the safe-haven Japanese yen and slipped versus the Swiss franc on Friday as possible renewed US-Iran tensions weighed on market sentiment.

The greenback was also pressured by weaker-than-expected US payrolls data for December, which followed a batch of strong economic figures. The report, however, was unlikely to sway the Federal Reserve from its neutral stance on interest rates.

The dollar index still posted its best weekly performance in two months.

Over the last few sessions, the currency market has been badgered by geopolitical tension.

The yen and Swiss franc had fallen from highs hit last week after the US and Iran, in recent comments, moved away from an all-out conflict.

Concerns grew, however, after the US imposed more sanctions on Iran on Friday in response to its retaliatory missile attack on US forces in Iraq and vowed to tighten the screws further on the Iranian economy if Teheran continued to engage in what it described as terrorist acts.

US Secretary of State Mike Pompeo, in an appearance at the White House, said he had "no doubt" that Iran had full intention of killing US forces in a missile attack on a base in Iraq in retaliation for the US killing of Iranian commander Qassem Soleimani.

"The fact that the US is still sort of acting aggressively towards Iran and still taking a hard line, helped create demand for safe havens," said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto. The renewed US-Iran tension came on the heels of a soft US non-farm payrolls report.

The dollar lost steam after the jobs data. Against a basket of currencies, the dollar fell 0.1 per cent to 97.30. The dollar index hit a two-week high of 97.584 during the session.

The dollar also eased from a four-week peak against the yen to trade slightly lower on the day at 109.49 yen.

The greenback also dipped versus the Swiss franc to 0.9727. REUTERS