* Dollar broadly supported on revived Fed tapering
* Yen near 2-month low vs dollar on rise in U.S. bond yields
* Sterling in focus ahead of BoE report
By Hideyuki Sano
TOKYO, Nov 13 The dollar held firm on Wednesday,
staying near a two-month high against the yen as investors bet
that the U.S. Federal Reserve is on course to start reducing its
stimulus as early as December.
After surprisingly strong U.S. October payroll data on
Friday had many investors reassessing the timing of a Fed
tapering, attention is now on the comments that nominee Fed
President Janet Yellen will make at her Senate confirmation
hearing on Thursday.
"Since Yellen has become a candidate to succeed Ben
Bernanke, she has hardly spoken about her view on monetary
policy. Because the market doesn't seem to doubt she is a dove,
there's a chance she is not as dovish as expected," said Ichiro
Asai, economist at Daiwa Securities.
The dollar held at 99.63 yen, near a two-month high
of 99.80 yen hit on Tuesday, having risen 0.6 percent so far
this week, as the U.S. currency drew strength from a surge in
U.S. bond yields.
Tighter U.S. monetary policy and higher U.S. bond yields
tend to favour the dollar by making dollar-denominated debt
more attractive to bond investors. The 10-year U.S. yield has
risen almost 20 basis points since the payroll data.
The dollar index, which measures the dollar's value
against a basket of major six currencies, also held near the
two-month peak of 81.482 struck on Friday. It last stood at
On Tuesday, Atlanta Fed President Dennis Lockhart, seen as a
centrist, did not rule out a tapering of the quantitative easing
programme at the Dec. 17-18 policy meeting, though he also said
the Fed should keep policy very easy.
Sterling was wobbly following a slide to a two-month low of
$1.5854 the previous day after UK inflation for October
fell more than expected.
It last stood flat at $1.5887, bracing for a
potentially hectic trading day ahead of UK job data at 0930 GMT
and more importantly the Bank of England's quarterly inflation
report on Wednesday an hour later.
The pound might get a lift if the BoE brings forward the
point at which it sees UK unemployment hitting 7 percent, the
level at which it would consider raising rates, though a fall in
inflation could give the central bank leeway to wait longer.
The euro fared a tad better, maintaining its gain from a
seven-week low of $1.3295 hit just after the European Central
Bank's surprise rate cut on Thursday.
The euro last stood at $1.3438, flat on the day but
clinging to its 0.5 percent gain since the start of the week.
The euro also held near a two-week high against the yen and
one-week high against sterling. It last stood at 133.81 yen
and 84.57 pence respectively.
The Australian dollar was listless, staying near two-month
low against the U.S. dollar, weighed also by a fall in energy
and commodity prices. U.S. crude futures prices hit a 4
1/2 month low.