Japanese yen falls to two-week low Dollar index up, investors...

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    • Japanese yen falls to two-week low
    • Dollar index up, investors focus on U.S. non-farm payrolls
    • Chinese yuan rises to five-month high vs dollar
    • Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

    (Adds new comment, updates prices)

    The safe-haven yen fell to two-week lows against the dollar on Thursday, as the United States and Iran moved away from an all-out conflict, prompting investors to take on more risk and shift focus to an upcoming U.S.-China trade deal and a U.S. non-farm payrolls report.

    U.S. President Donald Trump responded to an Iranian attack on U.S. forces with sanctions, not violence. Iran offered no immediate signal it would retaliate further against a Jan. 3 U.S. drone strike that killed its senior military commander.

    "After yesterday's press conference and after it looked like Iran was not trying to escalate things, we are now getting back to the status quo that we saw before the Iran situation," said John Doyle, vice president of dealing and trading, at Tempus Inc in Washington.

    The yen, a safe haven in times of geopolitical turmoil because of its deep liquidity and Japan's current account surplus, reversed gains against the dollar after Iran's missile strike. The dollar was last up 0.4% at 109.51 yen JPY= , after hitting 109.57 yen, its highest since Dec. 27.

    Gold prices retreated further from a near-seven-year peak scaled in the previous session. Implied volatility gauges for euro/dollar are falling back toward late 2019 lows, according to Reuters analysts.

    Three-month implied volatility in euro/dollar fell to 4.27% at the end of November, its lowest level on record.

    Focus is expected to shift back to the global economy, with expectations the United States and China will sign a trade deal next week providing underlying support for risk assets.

    Investors think the deal will clear one of the world economy's biggest uncertainties and help boost global growth this year, although some think that view is too optimistic.

    Market participants are also looking ahead to Friday's U.S. non-farm payrolls report, with forecasts of 164,000 new jobs in December, from 266,000 the previous month.

    "The forecast of 160,000 jobs or so is not a big number so I think there is a little room for an upside surprise," said Tempus' Doyle. "I will be looking at November's number of 266,00 - whether that will be revised."

    In other currencies, China's yuan rose to a five-month high of 6.9175 against the dollar overnight in the offshore market CNH=EBS , boosted by a steady inflation readout.

    In afternoon trading, the dollar index was 0.1% higher on the day at 97.433 .DXY . The Swiss franc was little changed against the dollar, which was last at 0.9734 franc CHF= .

    	======================================================== 
    	Currency bid prices at 3:36PM (2036 GMT) 
    
     Description	  RIC		 Last		   U.S. Close  Pct Change	 YTD Pct	 High Bid	Low Bid 
    											  Previous				   Change				  
    											  Session											
     Euro/Dollar	  EUR=		$1.1106		$1.1103	 +0.03%		 -0.93%	  +1.1120	 +1.1094 
     Dollar/Yen	   JPY=		109.5200	   109.1200	+0.37%		 +0.61%	  +109.5700   +109.0200 
     Euro/Yen		 EURJPY=	 121.63		 121.17	  +0.38%		 -0.26%	  +121.6900   +121.1400 
     Dollar/Swiss	 CHF=		0.9733		 0.9737	  -0.04%		 +0.57%	  +0.9747	 +0.9712 
     Sterling/Dollar  GBP=		1.3065		 1.3097	  -0.24%		 -1.46%	  +1.3124	 +1.3014 
     Dollar/Canadian  CAD=		1.3063		 1.3037	  +0.20%		 +0.59%	  +1.3104	 +1.3026 
     Australian/Doll  AUD=		0.6854		 0.6865	  -0.16%		 -2.38%	  +0.6880	 +0.6851 
     ar																							  
    
     Euro/Swiss	   EURCHF=	 1.0812		 1.0813	  -0.01%		 -0.37%	  +1.0833	 +1.0796 
     Euro/Sterling	EURGBP=	 0.8499		 0.8478	  +0.25%		 +0.52%	  +0.8533	 +0.8472 
     NZ			   NZD=		0.6609		 0.6646	  -0.56%		 -1.89%	  +0.6658	 +0.6601 
     Dollar/Dollar																				   
    
     Dollar/Norway	NOK=		8.8825		 8.8683	  +0.16%		 +1.19%	  +8.9024	 +8.8550 
     Euro/Norway	  EURNOK=	 9.8649		 9.8523	  +0.13%		 +0.27%	  +9.8854	 +9.8397 
     Dollar/Sweden	SEK=		9.4933		 9.4593	  +0.36%		 +1.56%	  +9.5007	 +9.4444 
     Euro/Sweden	  EURSEK=	 10.5433		10.5060	 +0.36%		 +0.71%	  +10.5482	+10.4969                    
 
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