REFILE-BUZZ-COMMENT-FX markets may get much more volatile

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Feb 10 (Reuters) - FX markets may become far more volatile with bigger movement resulting from the swings in sentiment surrounding an escalating trade dispute.

While this should support bigger gains for the global reserve currency which has already broken above important levels, few traders have been prepared to buy it, and this will likely result in more volatile conditions.

There is little to restrain a dollar rise that has seen it recently eclipse record highs versus China's yuan, Indian rupee and Turkish lira. All-time highs for Indonesia's rupiah, Philippine peso and Malaysian ringgit are nearby, and the central banks of all the aforementioned weak currencies - bar ringgit - are easing policy.

EUR/USD has broken under the base of long-held ranges, yet traders who have not wagered much on the eventuality have pared their bets. They have also opted to bet that USD/JPY drops and have almost nothing wagered on the pound.

Surprisingly, three dollar short positions have emerged.

Without the restraint of a large speculative position, the dollar, safer than gold which is rocketing in value, could rise far and fast.

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