* Dollar index firmer, edges up from Thursday's 2-week low
* Yen takes breather after previous day's rally
* All eyes still on Fed meeting next week
By Masayuki Kitano
SINGAPORE, Sept 13 The dollar inched up versus a
basket of currencies on Friday but was still lower for the week,
having been dented by growing doubts that the Federal Reserve
will scale back monetary stimulus in any significant manner next
The dollar index edged up 0.1 percent to 81.594,
having pulled up from a two-week low of 81.356 set on Thursday.
At its current levels, the dollar index was still down about 0.7
percent for the week.
The yen took a breather after having rallied on Thursday,
when investors unwound yen-bearish positions, particularly
versus the Australian dollar, in the wake of disappointing
Australian jobs data.
The dollar inched up 0.1 percent to 99.60 yen. The
dollar rose to as high as 99.85 yen earlier on Friday, up from
Thursday's intraday low of 99.00 yen.
"It just looks like some short-covering," said a trader for
a European bank in Tokyo, referring to the dollar's earlier rise
versus the yen.
Some market players cited the Japanese government's upgrade
of its economic assessment in September as a supportive factor
for the dollar versus the yen.
The government raised its view on the economy for the
seventh time this year because of rising capital expenditure, in
another sign Prime Minister Shinzo Abe's reflationary policies
are boosting growth.
"It seems a step away from deflation. In my view, anything
that seems to edge away from deflation pressures is more
negative for the yen," said Mitul Kotecha, head of global
foreign exchange strategy for Credit Agricole in Hong Kong.
Traders said the greenback also gained some support as U.S.
Treasury yields nudged higher. Then 10-year U.S. Treasury yield
last stood near 2.931 percent, up from Thursday's
U.S. close of 2.905 percent.
The greenback was broadly firmer, with the euro easing 0.1
percent to $1.3283.
The Australian dollar eased 0.2 percent to $0.9245.
That was down from Thursday's three-month high of $0.9355, which
had been set just before the weak Australian employment figures
triggered a drop in the Aussie dollar.
Traders said the main focus is still whether the Federal
Reserve will begin to scale back stimulus at its Sept. 17-18
policy meeting and by how much.
Following last Friday's uninspiring U.S. non-farm payrolls
data, markets are less worried about the risk of any major
pullback from the Fed.
Indeed, many traders and analysts expect the Fed to reduce
its $85 billion monthly bond-buying programme by a modest $10
A much larger number would be seen as hawkish and
undoubtedly provide a boost to the dollar and put emerging
market currencies under renewed pressure. Conversely, any delay
in tapering will be interpreted as dovish, traders said.
Many emerging market currencies, hit hard by an outflow of
funds, have retraced some of their deep losses in recent
"This is likely the result of profit taking, marginally
better China data and investors becoming more sanguine over risk
events next week," said Oliver Harvey, a London-based analyst at
"From here on in, markets should discriminate more between
currencies, particularly if risk remains buoyant," Harvey said,
adding the Indonesian rupiah, Turkish lira and
South African rand remained vulnerable.