* Dollar knocked off two-week highs vs currency basket
* But greenback hits peak vs yen last seen in January
* Yellen says Fed's commitment still needed for some time
(Adds quotes, late yen gains, data details)
By Michael Connor
NEW YORK, April 1 The dollar eased on Tuesday as
currency traders looked ahead to key U.S. jobs data due Friday
and shrugged off a report showing growth at U.S. factories
The dollar index slipped 0.02 percent to 80.086, off
a two-week high of 80.296 on Monday, when Federal Reserve Chair
Janet Yellen defended America's loose-money policies and rained
on hopes U.S. interest rate increases may start in early 2015.
The euro was helped by data signalling easing price
pressures in the euro zone and rose for a third day against the
dollar, by 0.17 percent in New York trading to $1.3793.
Against the yen, the dollar touched a high of 103.71 yen
, its best since Jan. 23, after a report showed U.S.
factory growth increasing for a second straight month.
"It is consistent with an economy making progress but one
growing between 2 and 2.5 percent. That's respectable but not as
much as the Fed would like," said Richard Franulovich, senior
currency strategist at Westpac Banking Corp in New York.
In contrast to the U.S. factory data, which lifted Wall
Street stocks and some U.S. Treasury yields,
comparable reports from Europe had manufacturing slowing in
March and factory output in China contracting for a third
But currency traders paid little heed and were looking ahead
to the March U.S. nonfarm payrolls scheduled for release on
Friday, according to Shaun Osborne, foreign exchange strategist
at TD Securities in Toronto.
"The focus is on U.S. data," Osborne said.
In earlier trading, the yen had been hurt by Japan's Tankan
survey that raised doubts about whether economic activity will
continue to improve. The survey will keep alive expectations the
Bank of Japan may ease policy further if the pain from a sales
tax hike proves worse than expected, analysts said.
"If there is clear weakness in the economic data from Japan,
we could see the BOJ ease policy," said Yujiro Gato, currency
strategist at Nomura. "But we do not expect that policy easing
to take place anytime soon, perhaps in the third quarter."
"So those expecting the BOJ to ease in the short term could
be in for a disappointment. But any dips in dollar/yen should be
bought into, and we eventually expect it to rise to 104 yen."
In a fresh setback for dollar bulls, Yellen said on Monday
"considerable" slack still existed in the U.S. jobs market and
further monetary stimulus could be effective. Her comments
somewhat countered those made last month when she suggested the
possibility of rate hikes from early 2015.
Still, with the Fed on track to withdraw monetary stimulus,
any further easing by the BoJ is expected to weigh on the yen,
said Jane Foley, senior currency strategist at Rabobank.
The euro rebounded from Monday's low of $1.3721. Most
traders do not expect the European Central Bank to ease policy
on Thursday, despite the drop in inflation last month to 0.5
The euro was up 0.61 percent against the yen at 143 yen
(Additional Reporting By Anirban Nag in London; Editing by Nick
Zieminski and James Dalgleish)