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FOREX-Dollar edges up versus yen; awaits data, Fed comments

Published 28/03/2016, 03:31 pm
© Reuters. FOREX-Dollar edges up versus yen; awaits data, Fed comments
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* Dollar edges higher vs yen

* Focus this week on U.S. data, comments from Fed officials

* Speech by Fed's Yellen due on Tuesday

* Dollar index touches highest level since mid-March (Updates prices, adds comments)

By Shinichi Saoshiro and Masayuki Kitano

TOKYO/SINGAPORE, March 28 (Reuters) - The dollar nudged up against the yen on Monday, after rebounding last week following a series of comments from U.S. Federal Reserve officials who supported the case for more interest rate hikes than markets had anticipated.

Such views helped the greenback recover from a knock earlier this month when the Fed halved its rate hike expectations to two from four this year.

U.S. indicators coming up this week such as non-farm payrolls and manufacturing PMI on Friday will give investors a chance to gauge whether the economy is robust enough to bear a series of rate hikes.

Other U.S. data that could impact the dollar this week include the core personal consumption expenditures price (PCE) index due later on Monday and Thursday's Chicago purchasing management index (PMI).

"Statements by the Fed's Yellen and Dudley will also be in focus. They are core Fed board members and dollar will be supported if they express hawkish views," said Shusuke Yamada, chief Japan FX strategist at Bank of America Merrill Lynch (NYSE:BAC) in Tokyo.

Fed Chair Janet Yellen speaks on Tuesday and New York Fed President William Dudley speaks on Thursday.

The dollar rose 0.4 percent to 113.60 yen JPY= . It had gained 1.4 percent versus the yen last week, pulling away from a 17-month low of 110.67 plumbed mid-month.

Some market players said the dollar's gains against the yen could be limited in the near term.

Yellen's speech probably won't sound as hawkish as the recent comments from other Fed officials and be more in line with what came out of the Fed's recent policy meeting, said Shinji Kureda, head of FX trading group for Sumitomo Mitsui Banking Corporation in Tokyo.

In addition, a seasonal tendency sometimes seen toward mid-April, for the yen to be weighed down by overseas investment by Japanese institutional investors, might not emerge this year, Kureda said.

"I find it hard to believe that Japanese players have been actively selling the yen and taking on foreign exchange risk after the (BOJ's) launch of negative interest rates," he said.

If anything, Japanese investors seem to have become more cautious about taking on risk, Kureda said, referring to their stance after the BOJ decided in late January to adopt negative interest rates.

As yields on Japanese government bonds of up to 12 years to maturity fell below zero recently, Japanese banks and life insurers have flocked into foreign bonds. Most of them, however, use currency swaps or forwards to hedge the risk of investing in another currency. euro held steady at $1.1163 EUR= following a loss of 0.9 percent last week.

The dollar index, which measures the dollar's value against a basket of six major currencies, touched a high of 96.399 .DXY earlier on Monday, its highest level since March 16. It last stood at 96.327.

The Australian dollar edged up 0.1 percent to $0.7511 AUD=D3 . The Aussie had lost 1.4 percent last week and pulled away from an eight-month high of $0.7681 set in mid-March, as commodity prices slid sharply from their recent peaks. (Editing by Kim Coghill)

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