* Swiss franc rises to all-time high versus dollar
* Middle East tension fuels safe-haven demand
* Oil rally fuels growth worries, hits U.S. dollar
(Updates prices)
By Wanfeng Zhou
NEW YORK, Feb 24 (Reuters) - The Swiss franc soared to a
record high against the U.S. dollar on Thursday and the yen
gained broadly as fears the uprising in Libya could spill over
to other oil producers drove investors to seek safety.
The dollar tumbled after a surge in oil prices stoked
worries about the impact on U.S. consumer spending, the engine
that drives the U.S. economy. Expectations the Federal Reserve
would lag other major central banks in raising interest rates
also pressured the currency.
The Swiss franc may extend gains should turmoil in the
Middle East and Africa spread. Further strength in the yen
could be limited, however, with the Japanese economy vulnerable
to high oil prices and the risk of currency intervention by
Japanese officials to protect exports.
"If this unrest continues, I believe the Swiss franc will
probably be the main beneficiary," said Vassili Serebriakov,
currency strategist at Wells Fargo in New York.
"The dollar is struggling to live up to its 'safe-haven'
credentials," he said. "There's some concern about the impact
of higher oil prices on the U.S. economy."
The dollar fell to a record low of 0.9234 Swiss franc
<CHF=EBS> on trading platform EBS, with losses accelerating
after automatic sell orders were triggered below the previous
record low of 0.9301 set at the end of last year. The dollar
last traded down 0.7 percent at 0.9259 franc.
The dollar has fallen nearly 4.8 percent against the franc
in the last two weeks, its worst showing since June.
Technical analysts said the U.S. currency's break below
0.9309 franc, around major trendline support drawn from lows
hit in 1995 and 2008, had opened the way to more losses.
One-month implied dollar/Swiss volatility continued to pick
up, trading around 11.20 percent <CHF1MO=> on Thursday,
although this was still well below levels of around 15 percent
seen at the start of the euro zone debt crisis in April 2010.
The euro fell to 1.2706 Swiss francs <EURCHF=EBS>, its
lowest since Jan. 13, and last traded down 0.4 percent at
1.2778.
OIL AND DOLLAR
Brent crude oil <LCOc1> leapt to its highest price since
August 2008 on concerns the unrest, which has cut more than a
quarter of Libya's output, could spread to other major oil
producers. For details, see []
Historically, higher oil has tended to lead to a weaker
dollar because rising energy prices would cause consumers to
curtail spending, which accounts for about two thirds of the
U.S. economy.
Credit Suisse said an analysis of data since 1999 shows the
U.S. dollar, as measured by the Federal Reserve's major
trade-weighted index, falls about 2.2 percent for every 10
percent rise in the oil price.
"Crucially, the Fed's policy response to oil shocks tends
to be dovish, whereas the ECB has historically reacted
hawkishly to energy price shocks," the firm wrote in a note to
clients.
Recent hawkish comments from European Central Bank
officials have boosted expectations of higher euro zone
interest rates. European Central Bank policy maker Axel Weber
said on Thursday the only way for euro zone rates to go is up.
[]
In contrast, St. Louis Federal Reserve President James
Bullard said the Fed can "never say never" to another round of
quantitative easing, a scenario that typically undermines the
greenback. []
The euro hit a three-week high of $1.3822 on EBS <EUR=EBS>
and last traded up 0.4 percent at $1.3803.
The next upside target is $1.3862, the February high. A
break above could see the euro rise toward the $1.3950 area,
the 200-week moving average.
Against a basket of major currencies, the dollar <.DXY>
slumped to its lowest level in three weeks at 76.991.
Against the yen, the dollar was down 0.9 percent at 81.79
yen <JPY=EBS>, after having hit 81.62 yen on EBS, the lowest
since Feb. 4. Traders cited dollar selling by Japanese
exporters and model funds, as well as some liquidation of long
dollar positions established since the beginning of the year.
(Additional reporting by Gertrude Chavez-Dreyfuss; Editing by
Leslie Adler)
