* Dollar rises after Fed minutes
* Fed minutes show some policymakers concerned about QE
* Dollar/yen hits highest level since July 2010
* Strong U.S. jobs data could lift dollar further
By Anooja Debnath
LONDON, Jan 4 The dollar hit its highest level
against the yen in nearly 2-1/2 years and rose versus the euro
on Friday after U.S. Federal Reserve minutes indicated growing
unease about the impact of further stimulus.
The dollar could gain further if U.S. jobs data due later in
the day beats expectations. The Fed has embarked on a $1
trillion stimulus p r ogramme to lower the U.S. unemployment rate,
so a strong jobs number may boost chances the Fed could halt its
asset buying sooner than expected.
The dollar broke past reported options barrier at 88
yen to hit a high of 88.26 yen, up 1.1 percent on the day and
its highest since mid-July 2010. Traders cited more option
barriers at 88.50 and 89 yen.
The dollar also rose to a three-week high against the euro
. The euro fell 0.2 percent to a low of $1.3006 with near-
term support expected at its 55-day moving average of $1.2986,
The dollar's broad gains drove its index, a measure
of the U.S. currency's value against six major currencies, to a
six-week high of 80.783 with U.S. banks cited as the main buyers
of the dollar.
Minutes from the Fed's last meeting surprised markets after
signalling reluctance among some policymakers to further expand
its asset purchases.
"We have seen quite a broad-based dollar rally after the
minutes which has ignited a fresh debate about how much
liquidity the Fed is going to pump into the economy," said
Daragh Maher, FX strategist at HSBC.
"Breaking through 88 in dollar/yen is a significant move. It
was a target for a number of people in the market and the
question is now whether we have a mindset of taking profit or we
look to extend," he added.
The euro rose 0.9 percent to 114.90 yen, but was
still far below an 18-month high of 115.995 yen set on trading
platform EBS on Wednesday.
The yen has been hurt in recent weeks with investors
betting the new government of Prime Minister Shinzo Abe will
push to weaken Japan's currency and implement aggressive
stimulus, and lean on the Bank of Japan to do the same.
A trader for a Japanese bank in Singapore said there was
persistent interest from non-Japanese players to buy dollars
against yen. "People outside Japan are all looking to buy (the
dollar) on dips," he said.
In light of the Fed minutes, markets will pay particular
attention to the U.S. non-farm payrolls report, due at 1330 GMT,
which is expected to show the American economy added 150,000
jobs in December, according to a Reuters survey of economists,
up from November's 146,000. The unemployment rate is expected to
stay at 7.7 percent.
Rob Ryan, strategist for RBS in Singapore, said the minutes
raised the chances that on the back of more good data, a few
other Fed policymakers "might shift in that direction and
possibly bring QE (quantitative easing) to an end well before
people thought was likely."
"If we do get some decent jobs data tonight, then the impact
of that jobs data is going to be magnified," Ryan added.