FOREX-Safe haven rally stalls, Bernanke’s speech eyed

* Demand for yen, Swiss franc stalls

* U.S. weekly new jobless claims fall more than expected

* Analysts expect economic weakness to underpin safe havens

* Traders await Bernanke’s speech at Fed gathering

(Adds comments, details. Updates prices.)

By Vivianne Rodrigues

NEW YORK, Aug 26 (BestGrowthStock) – A rally in safe-haven
currencies such as the yen and the Swiss franc stalled on
Thursday as global equities stabilized and investors braced for
Federal Chairman Ben Bernanke’s speech on Friday.

Rising concerns over the deepening economic slowdown pushed
the yen and Swiss franc to multi-year highs this week due to
their perceived safe-haven status.

But investors were reluctant to keep pushing those
currencies higher on Thursday ahead of an annual Federal
Reserve gathering in Jackson Hole, Wyoming where Bernanke will
give his thoughts on the U.S. economy. For details, see

Demand for the yen cooled amid speculation Bank of Japan
Governor Masaaki Shirakawa might address the currency’s
strength at the retreat. The dollar got some support after a
government report showed new U.S. claims for unemployment
benefits fell more that expected last week. [ID:nN26152418]

Still, analysts such as Alan Ruskin, global head of G10 FX
strategy at Deutsche Bank AG, said moves would be limited
before Bernanke’s speech.

“For the currency market, the immediate response has been
risk positive, best expressed through dollar/yen,” Ruskin said.
But “given proximity to the Bernanke speech tomorrow, I suspect
there will be a lack of follow-through all round to the data.”

In midday trading in New York, the dollar was little
changed at 84.58 yen (JPY=: ), while the euro rose 0.2 percent to
$1.2690 (EUR=: ). The yen rose to 15-year high on Tuesday.

The euro touched an all-time low versus the Swiss franc on
Wednesday (EURCHF=: ) but after a bounce in European stocks
(.FTEU3: ) it was little changed on Thursday at 1.3053. The
single currency also rebounded versus the yen to trade 0.3
percent higher at 107.40 yen (EURJPY=: ) after hitting a
nine-year low on Tuesday.

The euro earlier broke through its 55-day and 100-day
moving averages at $1.2713 and $1.2737 respectively. A close
above these levels would add to upward momentum.

But analysts said better sentiment was unlikely to be

“While the euro may enjoy additional near-terms gains, its
upside should prove very limited, especially in an environment
where investors are growing increasingly nervous about the
global economic outlook,” said Omer Esiner, chief market
analyst at Commonwealth Foreign Exchange in Washington.


Analysts said the market was well contained on caution
about possible Japanese intervention, while many investors
remained on the sideline.

News that Shirakawa would attend the Jackson Hole
conference made some players hesitant to push the yen higher.
Speculation has grown Japan may intervene to stem the yen’s
rise for the first time since March 2004. It hit an all-time
high of 79.75 to the dollar in 1995. [ID:nTKV006403]

Japan has not been immune to the deep global recession, and
a strong yen will dampen demand for Japanese exports,
offsetting other measures to stimulate the economy.

Suzuki Motor (7269.T: ), for example, loses 700 million yen
($8.3 million) from its annual operating profit for every
one-yen fall in the dollar. [ID:nTOE67P029]

Bernanke will speak in Jackson Hole on Friday about
uncertain prospects for the world’s largest economy but may not
offer many clues on whether the U.S. central bank will pump
more cash to keep the recovery going.

“The latest data though erratic week to week, plays to the
camp that the trends in the labor market will not put as much
pressure on the Fed Chairman to display a dovish line
(tomorrow),” said Ruskin at Deutsche Bank.

(Additional reporting by Nick Olivari in New York; Editing
by Andrew Hay)

FOREX-Safe haven rally stalls, Bernanke’s speech eyed