* Dollar rally loses steam as investors await Yellen's
* Yellen could counter hawkish tone in Fed minutes
* ECB's Draghi also due to speak at Jackson Hole
(Updates prices, adds comments)
By Masayuki Kitano and Ian Chua
SINGAPORE/SYDNEY, Aug 22 The dollar hovered just
below its 2014 peak against a basket of major currencies on
Friday, with bulls turning cautious ahead of a speech by Federal
Reserve Chair Janet Yellen.
The dollar index held steady at 82.144, having risen
as high as 82.364 on Thursday - a level last seen in early
It was still up nearly 0.9 percent so far this week and on
track for its best weekly gain since late January. Upbeat U.S.
housing data and a hawkish-sounding Fed minutes have combined to
give the greenback a big boost.
This week's rally left the dollar on the verge of breaking
above its April peak of 104.13 yen, a move that could
open up the way to 105.45, set in January.
The dollar held steady at about 103.83 yen, not that far
from a 4-1/2 month high near 103.97 yen on Thursday.
"Anything remotely less dovish than expected from Yellen
should lift the dollar, and dollar/yen will be the front-runner
there," said Jesper Bargmann, head of trading for Nordea Bank in
"It has been consolidating for quite some time, and it looks
like it is trying to establish a new uptrend," he said,
referring to the dollar's moves against the yen.
The euro held steady near $1.3283, having bounced off
an 11-month trough of $1.3242 set on Thursday, aided in part by
a survey that showed Germany's private sector grew for a 16th
month running in August.
Other currencies were also off their lows including the
Australian dollar, which was last up 0.1 percent at $0.9312
, having pulled up from Thursday's 2-1/2 month low of
Traders said the risk to dollar bulls now is Yellen herself.
"After the hawkish bias to FOMC minutes, the dovish camp
gets its chance to sound off at Jackson Hole," said Kit Juckes,
strategist at Societe Generale.
Yellen is due to give a speech at the annual gathering of
central bankers in Jackson Hole, Wyoming. The topic of this
year's symposium is "Re-Evaluating Labor Market Dynamics".
Last month, Yellen stressed there was significant
underutilization of labour resources, prompting markets to push
back the timing of the first interest rate hike.
In addition to Yellen, European Central Bank President Mario
Draghi will also be giving a speech at Jackson Hole on Friday.
Market participants said the dollar could slip if Yellen
sounds dovish, but added that any fall in the greenback was
likely to be mild.
"There could be some profit-taking, but at the same time I
think the profit-taking could be quite shallow," said Sim Moh
Siong, FX strategist for Bank of Singapore, referring to the
outlook for the dollar against the yen.
One factor that could help temper gains in the dollar
against the yen is the lack of more significant rises in U.S.
bond yields, Sim said, adding that the dollar may struggle to
rise above levels around 104.50 yen in the near term.
The U.S. two-year Treasury yield last stood at around 0.47
percent. While the two-year yield has edged up from a
two-month low hit last Friday, it remains below a three-year
high of 0.59 percent touched in late July.
(Editing by Shri Navaratnam and Richard Borsuk)