FOREX-Dollar holds higher after Warsh announced as Fed chair

By Alun John

TOKYO/LONDON, Jan 30 (Reuters) - The dollar held higher on the day on Friday after U.S. President Donald Trump said he had appointed former governor Kevin Warsh as chair of the U.S. Federal Reserve.

The move will give a frequent Fed critic a chance to put his idea of monetary policy "regime change" into practice at a moment when the president has pushed for more control over the central bank.

The euro was last down 0.2% at $1.1947, EUR= sterling was off 0.3% at $1.378, GBP= while the dollar climbed 0.5% against the Japanese yen to 153.8 yen. JPY=

That left the dollar index, which tracks the currency against six peers 0.2% higher at 96.47. =USD

The dollar had strengthened after reports earlier in the day that Trump intended to name Warsh, with the dollar index up around 0.5%. It then retreated after the announcement in a typical 'buy the rumour sell the fact' pattern.

"I would say it (Warsh's appointment) is dollar positive. He's an experienced central banker with previous Fed experience," said Kirstine Kundby-Nielsen, an analyst at Danske Bank.

"It alleviates some of the nervousness should we have got a Fed chair who was more politicised or who was a lot more dovish."

"In that sense it is pricing out some of the risk that it would have been someone who's been clear in communicating how dovish they would be, like (Stephen) Miran."

The dollar also received a lift after Republican and Democratic lawmakers hammered out a deal to stave off a looming government shutdown.

In combination, that has helped the currency stabilise after escalating conflict abroad and unease over domestic immigration crackdowns have hammered the U.S. currency this month.

The dollar index hit a four-year low earlier this week.

POSITIONS LIGHTENING INTO WEEKEND

Nonetheless there is no sign of newsflow slowing.

With tension simmering in Iran, Trump said on Thursday he planned to speak with leaders in Tehran, even as the U.S. dispatched another warship to the Middle East and Pentagon chief Pete Hegseth said the military would be ready to carry out whatever the president decided.

The White House also said Trump signed an executive order for tariffs on countries that provide oil to Cuba, while he threatened new tariffs on Canada and said the United States was decertifying business jets made there.

"Any sensible market participant would not want to carry a big position into the weekend," said Khoon Goh, head of Asia research for ANZ in Singapore. "So some of this could just be positioning lightening up. If you're short dollars, you've done well, take your chips off the table."

Moves have not just been on the dollar side of the equation.

While the Japanese yen may be softer on the day, it is still poised for its second straight weekly gain, after Japanese policymakers hinted at possible coordinated currency market intervention with the United States to defend the currency that had tumbled to near 18-month lows.

Economic data from Friday showing the euro zone economy grew more quickly than expected last quarter, was largely overwhelmed in currency markets by the noise around Warsh's appointment.

It showed consumption and investments kicked into higher gear, offsetting low exports and the exceptional uncertainty emanating from U.S. trade policy.

The dollar also climbed on the safe-haven Swiss franc, up 0.4% to 0.767 francs CHF=

The Swiss currency has been a major beneficiary of recent economic and geopolitical uncertainty, trading around its strongest since January 2015, when the SNB abandoned its exchange rate cap, sending the franc up as much as 30%.

In cryptocurrencies, bitcoin BTC= tumbled 2% to $82,571, touching the weakest since November 21.