FOREX-Dollar cheered by Fed minutes, tracks higher U.S. yields
* Dollar rises as U.S. yields touch fresh two-year highs * Fed minutes keep September tapering bets alive * US jobless claims rise, but labor market trend improving * EZ PMIs buoy euro vs currencies other than dollar By Gertrude Chavez-Dreyfuss NEW YORK, Aug 22 (Reuters) - The dollar rose for a second straight session on Thursday, tracking gains in U.S. Treasury yields, as the Federal Reserve's minutes of its July meeting cemented market expectations that the central bank will reduce its bond-buying program in September. The greenback, however, trimmed gains after data showed U.S. initial jobless claims rose in the latest week, although they did stay close to a six-year low. The report, however, did not change the market's view for a tapering of the Fed's monetary stimulus next month. "The Fed tapering theme continues. Yesterday's Fed minutes reinforced expectations that the Fed will taper its quantitative easing program in September and today's jobless claims didn't really change that," said Greg Moore, currency strategist at TD Securities in Toronto. "The jobless claims rose but they were not really that far off from the consensus forecast." Initial claims for state unemployment benefits climbed 13,000 to 336,000, just above the level expected by economists in a Reuters poll, Labor Department data showed on Thursday. Despite the increase, the four-week moving average for new claims, which gives a better reading on labor market trends because it smoothes out volatility, fell to its lowest level since November 2007. In early New York trading, the dollar was up 0.4 percent against a basket of currencies at 81.514, after breaking through initial resistance at 81.604, its 200-day moving average. It hit an intra-day high of 81.719 which was a one-week peak. The U.S. 10-year Treasury yield set a fresh two-year high of 2.936 percent on Thursday. Such a rise in yields can increase the attractiveness of dollar-denominated assets. The dollar hit a more than two-week high against the yen at 98.80 yen, breaking past the Aug. 15 peak of 98.66 yen, which was acting as initial resistance. It was last at 98.40 yen, up 0.8 percent. The spread between U.S. ten-year Treasury yields and equivalent Japanese (JGB) yields stood at highs last seen in April 2011, favouring the dollar over the yen. Against the buoyant U.S. dollar, the euro slipped 0.1 percent to $1.3342 on reported selling by real money accounts. Chartists said support was at $1.3243, the May 1 high. The euro had earlier pared losses against the dollar and gained broadly against other currencies after preliminary Purchasing Managers' Index data showed business activity across the euro zone picked up more than expected this month, led by Germany. But analysts remain bearish on the euro versus the dollar, given the interest rate differentials between the European Central Bank and the Fed. "The ECB is still very vague about its forward guidance, just saying they are going to keep rates low for an extended period, whereas the Fed is quite clear about its tapering," said Antje Praefcke, senior currency strategist at Commerzbank, adding that her bank was bearish on the euro and expects it to end the year at $1.27. Although the euro struggled against the dollar, the PMI figures were supportive of the single euro zone currency against the yen, rising 0.6 percent to 131.26 yen. The euro also gained against sterling, up 0.3 percent at 85.50 pence and hit a near three-year high versus the Norwegian crown at 8.1375 crowns. It was last 8.1237 crowns, up 0.1 percent.