FOREX-Swiss franc slumps in mini 'flash-crash'; dollar up on trade angst

Reuters

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    * Dollar stays firm as investors seek safe haven
    * Franc drops 1 pct in mini 'flash-crash'
    * Onshore yuan falls vs dollar as China markets reopen
    * Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

 (Recasts with Swiss franc, adds quotes, updates prices)
    By Tom Finn
    LONDON, Feb 11 (Reuters) - The dollar rose on Monday as
concerns grew that U.S.-China talks would not heal a rift over
trade between the world's largest economies and the Swiss franc
slid in a mini "flash-crash".
    A brief 1 percent drop in the franc gave currency traders a
shock during Monday's Asia session.
    A Japanese public holiday meant that markets were quiet and
thin liquidity helped cause a mini recurrence of the "flash
crash" that hit foreign exchange markets early last month.  
    Within a matter of minutes, the Swissie slid from 1.0004 per
dollar around 2200 GMT on Sunday to as low as 1.0095, the lowest
since November, before reversing the move almost as suddenly to
trade 0.2 percent stronger on the day.
    The move was similar to the whiplash that saw the yen jump 7
percent against the Australian dollar early on Jan. 3, when
Japanese markets were nearing the end of a week-long New Year
holiday break.
    "Since there was no material news during the early Asian
session, the move seems owed mainly to some large orders being
executed in an environment of very thin liquidity," said Marios
Hadjikyriacos, an analyst at broking firm XM.
    Other analysts downplayed the move, though.
    "There's nothing to comment on... a 1 percent move in thin
liquidity is not a crash. If anyone knows about seismic FX
market moves... it's the Swiss National Bank," said Viraj Patel,
a currency strategist at Arkera, a financial technology firm. 
    The franc soared as much as 30 percent in 2015 after the SNB
shocked markets by scrapping the franc's peg to the euro.    
    At 12:30 GMT the Swiss franc  CHF=EBS  was down 0.2 percent
at 1.002 francs per dollar.
    That was largely due to broad strength in the dollar. 
    The greenback is being lifted by its safe-haven appeal as
investors, worried about a sharp global economic slowdown, pile
into the world's most liquid currency.
    The U.S. currency is headed for an eighth consecutive day of
gains.
    High-level talks in Beijing this week are a leading focus
for investors, many of whom see little prospect for a trade deal
and instead expect an extension of the March 1 deadline for
deciding whether to increase tariffs.  urn:newsml:reuters.com:*:nL1N2030ZH 
    Emerging market and China-sensitive currencies such as the
Australian dollar are most likely to be affected.
    The dollar's recent strength has emerged despite the Federal
Reserve striking a cautious tone at its policy meeting in
January. 
    "The U.S. currency is currently in demand as a safe haven.
This is reflected in the fact that the Swiss franc and the
Japanese yen – also typical safe haven currencies – have also
been able to appreciate since the start of the month," said Thu
Lan Nguyen, an FX strategist at Commerzbank in Germany. 
    The dollar index  .DXY , a gauge of its value versus six
major peers, was 0.2 percent higher at 96.83.
    On Monday morning, when China markets reopened after a
one-week holiday break, the dollar was 0.5 percent higher versus
the yuan  CNY=  at 6.7753.
    The euro  EUR=EBS  was a touch lower versus the greenback at
$1.1315.
    The euro came under pressure as core European government
debt yields touched their lowest in over two years. The single
currency has lost 2.5 percent so far this month.
    The European Commission on Thursday sharply cut its
forecasts for euro zone economic growth for this year and next.
 urn:newsml:reuters.com:*:nL5N2023IE 

 (Reporting by Tom Finn, Editing by William Maclean and Kirsten
Donovan)
 ((mailto:tom.finn@tr.com; +44 2075427508 ; Reuters Messaging:
rm://tom.finn.reuters.com@reuters.net))

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