* Downbeat U.S. economic data curbs speculation that Fed
will hike soon
* Iraq tensions underpin traditionally safe-haven yen
* Sterling pushes to five-week highs after Carney tips
By Lisa Twaronite
TOKYO, June 13 The dollar steadied in Asian
trading on Friday but remained near two-week lows against the
yen after tensions rose in Iraq and downbeat U.S. economic data
gave investors no reason to believe the Federal Reserve will be
raising interest rates anytime soon.
By contrast, the pound gained over a cent overnight to
five-week highs after Bank of England Governor Mark Carney said
on Thursday that British interest rates could rise sooner than
financial markets expect. The pound was last up 0.1 percent to
Carney also said the central bank would carefully weigh the
merits next week of tackling housing market risks, including an
undesirable loosening in mortgage underwriting
Expectations that the Bank of Japan will hold monetary
policy steady on Friday also underpinned the Japanese currency.
The BOJ might upgrade its view on overseas growth after the
conclusion of the two-day meeting.
Governor Haruhiko Kuroda will speak after the meeting, and
is expected to continue to stress that Japan is making progress
toward meeting the BOJ's target of 2 percent inflation during
the fiscal year beginning in April 2015. His optimism on meeting
the price target has led some investors to scale back bets of
further monetary easing this year.
The Commerce Department said on Thursday that retail sales
increased 0.3 percent in May, missing expectations for a 0.6
Separately, the Labor Department said initial claims for
state unemployment benefits rose 4,000 to a seasonally adjusted
317,000 for the week ended June 7, exceeding expectations.
"These disappointing numbers drove the greenback lower and
put pressure on Treasury yields and U.S. stocks," Kathy Lien,
managing director of FX strategy for BK Asset Management, said
in a note to clients.
"Yet there was no major implication for Fed policy - if
anything these reports reinforce the central bank's commitment
to taper slowly and their intention to leave monetary policy
unchanged for a long stretch of time before raising rates," she
The dollar was steady on the day at 101.72 yen, after
dropping as low as 101.60 yen on Thursday, while the euro was
also treading water at 137.85 yen.
The euro was flat from late U.S. levels against the
greenback at $1.3550, but remained not far from a
four-month low of $1.3503 set last week after the European
Central Bank unveiled a package of easing measures, and became
the first major central bank to charge financial institutions
for parking their funds with it.
The yen's traditional safe-haven status also gave it a lift,
as tensions rose in Iraq. Sunni Islamist rebels surrounded the
country's largest refinery on Thursday and extended their
advance south toward Baghdad.
U.S. weapons maker Lockheed Martin Corp said on
Thursday that about two dozen of its employees were evacuating
northern Iraq, and the U.S. State Department said other
companies were also relocating their workers due to security
(Editing by Shri Navaratnam)