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FOREX-Dollar shy of highs as investors await U.S. employment cues

Published 30/08/2016, 03:22 pm
© Reuters.  FOREX-Dollar shy of highs as investors await U.S. employment cues
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* Consumer spending data reinforces Fed officials' hawkish message

* Better-than-expected Japanese spending data underpin yen

* Japan's Suga warns of action against any excessive yen strength

TOKYO, Aug 30 (Reuters) - The dollar edged up on Tuesday, but mostly took a breather as investors waited to see if U.S. employment data later this week would reinforce U.S. Federal Reserve officials' recent hawkish messages.

The dollar index, which tracks the greenback against a basket of six major rivals, added 0.2 percent to 95.714 .DXY , though it remained shy of the previous session's high of 95.834 which was its highest since Aug. 12.

It traded well above Friday's session low of 94.246 plumbed before Federal Reserve Chair Janet Yellen's upbeat comments on the U.S. economy and Fed Vice Chair Stanley Fischer's remarks that interest rate hikes were possible this year.

The U.S. employment report on Friday is expected to show an increase of 180,000 jobs in August, according to the median estimate of 89 economists polled by Reuters, below the better-than-expected 255,000 additions in July and 292,000 gains in June. ECONUS

"It's hard to move until we see the jobs figures, after Fischer stressed that the August report would be a key factor, and that an interest rate hike could follow good numbers," said Kumiko Ishikawa, senior FX analyst at Gaitame.Com Research Institute in Tokyo.

U.S. economic data on Monday showed consumer spending increased for a fourth straight month, pointing to a pickup in growth that could pave the way for the Fed to raise interest rates later this year. euro inched 0.1 percent higher to 114.11 yen EURJPY= and was down 0.1 percent against the dollar at $1.1172 EUR= .

The dollar added 0.2 percent to 102.14 yen JPY= , moving back toward Monday's high of 102.39.

The yen has broken above 99 against the dollar several times this month, which has made Japanese officials wary of speculative moves.

Japanese Chief Cabinet Secretary Yoshihide Suga told Reuters in an interview on Tuesday that the government is watching market moves carefully and is ready to respond "appropriately", when asked whether Tokyo could intervene in the currency market to stem excessive yen rises. speculators reduced their bets on the dollar for a fourth straight week through Aug. 23, trimming their net dollar-long positions to their lowest since early July, and raising their net long positions on the yen. IMM/FX

"The market is very reactionary, but even though there is an extreme position story, there's not an extreme adjustment of that extreme," said Bart Wakabayashi, head of Hong Kong FX sales at State Street Global Markets.

"There's not a lot of conviction behind the moves that we're seeing," he said. "It's probably just an adjustment of yen long positions."

Underpinning the yen, data released early in the session showed Japanese household spending fell less than expected last month and the jobless rate hit a two-decade low. with the economy barely growing and inflation sliding further away from the Bank of Japan's 2 percent target, most economists polled by Reuters expect the bank to ease further next month when it conducts a comprehensive review of the effects of its stimulus programme.

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