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FOREX-Dollar stands tall after data enhances US rate hike expectations

Published 31/08/2016, 10:28 am
© Reuters. FOREX-Dollar stands tall after data enhances US rate hike expectations
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* Dollar/yen hovers near 1-month high

* Upbeat US consumer confidence data helps lift dollar

* US ADP employment report, Chicago PMI awaited for more cues

By Shinichi Saoshiro

TOKYO, Aug 31 (Reuters) - The dollar hovered near a three-week high against a basket of currencies on Wednesday after upbeat U.S. data enhanced expectations of a near-term rate hike by the Federal Reserve.

The dollar index .DXY was little changed at 96.028 after rising to 96.143 overnight, its highest since August 10.

The greenback received a boost on Tuesday after the Conference Board said its consumer confidence index rose to an 11-month high in August. Other data showed that house price growth moderated in June but still remaining strong. ECONUS

Comments on Friday by Fed Chair Janet Yellen had increased expectations the central bank could hike as early as September, and the markets will be awaiting more data to see if the U.S. economy is robust enough to withstand monetary tightening.

All eyes are on Friday's U.S. August non-farm payrolls report but investors will first digest the ADP employment data and the Chicago purchasing managers' index (PMI) due later on Wednesday.

A notable underperformer against the dollar was the yen, which has also been weighed down by the latest round of verbal mornings from Japanese authorities.

Japan's Chief Cabinet Secretary Yoshihide Suga told Reuters on Tuesday that the government will respond "appropriately" to unwelcome yen gains. dollar, which was at around 100.500 yen at the start of the week, was little changed at 102.895 JPY= after rising on Tuesday to a one-month peak of 103.140.

"The 104 level will come into view for dollar/yen if the U.S. ADP employment report beats expectations," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.

"But the pair also looks to have gone a little too far, as it has gained despite risk aversion amid falls in crude oil and U.S. stocks and flat Treasury yields," he said.

The euro EUR= was little changed at $1.1148 , hovering near a three-week low of $1.1133 plumbed on Tuesday.

The Australian dollar edged up 0.2 percent to $0.7523 AUD=D4 on bargain hunting after its overnight slide to a one-month trough of $0.7500. (Editing by Richard Borsuk)

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