* Yen hits 2-month low versus dollar
* Euro rises to one-week high vs dollar
* Options market bets on dollar strength vs yen
By Gertrude Chavez-Dreyfuss
NEW YORK, Nov 15 The safe-haven dollar and yen
fell on Friday after Federal Reserve Vice Chair Janet Yellen
lifted investor appetite for riskier assets by defending the
U.S. central bank's current stimulus measures.
Yellen, speaking at her confirmation hearing before the
Senate Banking committee on Thursday, stated that the Fed will
keep its stimulus program intact until the U.S. economy shows
more strength and stability.
Her comments have dented the low-yielding yen, pushing the
dollar to a two-month high against the Japanese currency. The
yen typically falls when investors are looking to take on risk.
The dollar, on the other hand, slid to a one-week low
against the euro.
Data on Friday showed U.S. industrial production dipped
unexpectedly in October as output at power plants and mines
declined, but a third straight month of gains in manufacturing
output suggested the economy remained on a moderate growth path.
"The moderate pace of growth in the U.S. economy no doubt
exacerbated by the budget impasse and lack of progress in the
job market may explain why the Fed will continue with the
monthly purchases," said Sean Cotton, vice president and senior
trader at Bank of the West in San Ramon California.
"As a result, the dollar is extending its decline and
expectation is for weakness until the Fed indicates otherwise.
This may be the trend until March."
The dollar index fell 0.2 percent to 80.85. On the
week, the dollar index was down 0.6 percent, its weakest weekly
performance since Oct. 18.
The euro was up 0.2 percent at $1.3489, after
touching $1.3505, its highest since Nov. 7. It gained 0.8
percent against the dollar this week.
Despite Friday's gains, analysts said the euro's overall
outlook looked less upbeat than the dollar given the disparity
between the U.S. and European economies. Weak euro zone GDP
numbers on Thursday have kept alive the possibility of more
central bank action to stimulate growth.
The yen fell broadly, with sterling hitting a four-year high
against the Japanese currency. The pound was last at
161.43 yen, up 0.5 percent.
The dollar rose 0.2 percent to 100.22 yen, having
touched a high of 100.43 yen earlier in the global trading day
and giving it the potential to target the Sept. 11 high of
The euro was also higher against the yen, hitting
a two-week high of 135.25 yen. It last traded 0.2 percent at
For the week, the dollar gained 1.1 percent against the yen,
its third straight weekly advance.
"The dollar/yen exchange rate broke a series of lower highs
dating back to its multi-year peak, and indeed the surge offers
evidence that it may yet continue higher," said David Rodriguez,
quantitative strategist at DailyFX in New York.
Options markets showed some investors betting on dollar
strength against the yen in the weeks to come.
The Australian and New Zealand dollars, meanwhile, which
offer higher yields than many other currencies and often gain
when investors' risk appetite increases, both rose. The
Australian dollar traded up 0.4 percent at US$0.9359
while the New Zealand dollar rose 0.6 percent to