Dollar sags against yen as Syria concerns sap risk appetite

The US dollar struggled against the yen on Thursday as investors sought shelter in the safe-haven Japanese currency on concerns over the possibility of Western military action against Syria.

The geopolitical tensions shifted some focus away from the US-China trade standoff, with the dollar last trading little changed at 106.81 yen after losing 0.4o percent overnight.

The dollar had risen to 107.40 yen on Tuesday. Meanwhile, the respite for the greenback was short lived, however, as focus shifted to the possibility of wider military conflict in the Middle East.

Tensions have started to increase after US President Donald Trump warned Russia on Wednesday of imminent military action in Syria over a suspected poisonous gas attack.

He also declared that missiles “will be coming” and lambasted Moscow for standing by Syrian President Bashar al-Assad.

“The yen has gained against the dollar on geopolitical concerns. The dollar has weakened against other currencies as well, but other factors are more at play, such as higher commodity prices and ECB monetary policy expectations,” said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.

“As for the Syrian tensions, divisions are seemingly being drawn along Cold War era lines with the United States, Britain and France on one side and Russia on the other, suggesting any standoff could be prolonged,” Yamamoto said.