* Dollar supported as Obama starts meeting lawmakers
* Fed minutes shows most board members still expected
tapering to begin this year
* Yellen nomination seen as removing one uncertainty in
* Dollar/yen finds strong support at 200-day moving average
* British pound loses steam after weak UK data
By Hideyuki Sano
TOKYO, Oct 10 The dollar firmed broadly on
Thursday on signs Washington is clawing towards breaking a
stalemate and averting a possible U.S. debt default late next
The dollar index inched up to 80.47, extending
its recovery from an eight-month low of 79.627 hit a week ago.
The euro was slightly easier at $1.3498 after having
fallen 0.35 percent overnight.
"There are hopes that Washington is moving on the deadlock
over the government shutdown and debt ceiling. The dollar looks
set to gain if these problems are solved," said Sho Aoyama,
senior market analyst at Mizuho Securities.
House Republican leaders will visit the White House on
Thursday as the search intensifies for a way to break the
Some Republicans and Democrats floated the possibility of a
short-term increase in the debt limit to allow time for broader
negotiations on the budget, even though there was no tangible
signs of progress on Wednesday.
Against the yen, the dollar rose 0.4 percent to
97.74, up more than a full yen from a two-month low of 96.55 yen
hit on Tuesday.
One trigger for investors' buying was the dollar's success
staying above a key support from its 200-day moving average in
the past few days. The average stood at 96.83 on Thursday.
"Some players were hoping to buy the dollar at around 95
yen. But once you think that the U.S. debt deal will be reached
in the end, then the latest dip offers a good opportunity to
buy," said a trader at a Japanese bank.
The U.S. currency received an additional boost after the
minutes of the Federal Reserve's September meeting revealed the
decision not to slow stimulus was a "close call" and that most
board members supported tapering bond-buying later this year.
Earlier on Wednesday, the dollar also gained on the news
that Federal Reserve Vice Chairwoman Janet Yellen will be
nominated as head of the U.S. central bank.
Although the news could have been seen as negative for the
dollar given that investors regard Yellen as a policy dove, it
helped soothe sentiment as the nomination was seen as reducing
uncertainty in a market gripped by fear of a U.S. debt default.
U.S. Treasury Secretary Jack Lew has said it will run out of
additional borrowing authority on Oct. 17.
Many investors are now looking to his testimony before the
Senate Finance Committee later on Thursday on his latest
estimate on the Treasury's funding positions as well as possible
Despite some signs of rapprochement in Washington, the
dollar could still be vulnerable to concerns about a debt
Short-term U.S. government bill yields were at the highest
level since the 2008 financial crisis, reflecting investor
Elsewhere, the British pound lost steam following an
unexpected fall in British industrial output and a
wider-than-expected trade deficit.
The pound shed 0.2 percent to $1.5927. extending
its 0.8 percent fall the previous day to a three-week low of
Against the euro, it stood near a five-week low of 84.875
pence per euro, and was last trading at 84.72.
The immediate focus is on the Bank of England's policy
announcement at 1100 GMT, though no policy change is expected.
The Australian dollar lost 0.5 percent against a broadly
firm U.S. dollar, unable to maintain its small gains after a
mixed bag of Australian employment data. The Aussie was at
$0.9406 after its rally following the job data ran into
heavy resistance near $0.95.