* Dollar, euro gains against yen, little impact from BOJ
* Iraq fighting underpins dollar and yen safe havens
* Sterling pushes to five-week highs after Carney points to rate rise
By Patrick Graham
LONDON, June 13 The dollar rose around a third of a percent
against the yen as markets listened to the Bank of Japan's latest comments on
policy on Friday while sterling soared on a surprise hint from the Bank of
England that interest rates could rise this year.
The big action overnight was all on the pound. BoE Governor Mark Carney sent
money market rates spinning higher by telling London's financial community at
Thursday's annual Mansion House dinner that rates may rise sooner than markets
That sent sterling to a 19-month high against the euro and close
to key resistance around $1.70, up around 1 percent since the close of play in
London on Thursday.
"For us, this was a clear signal that the first hike will come this year,"
said Lee Hardman, a strategist with Bank of Tokyo Mitsubishi-UTJ in London. "We
think the first month for the bank to move will be November."
The move was all the more shocking given how little faith the market has
shown in the pound's ability to rise further against the dollar after a 10
percent rise in the past year. The currency has baulked so far this year at any
attempt to breach $1.70 and sellers quickly appeared around $1.6980. By midday
in Europe, sterling had gained another 0.2 percent compared to prices late on
Thursday in the U.S. session.
Most analysts and traders have continued to back sterling against the euro,
which was worth less than 80 pence for the first time since November 2012.
Both the yen and the dollar looked supported going into the weekend given
concerns over a conflict in Iraq that has prodded oil prices higher this week.
Slightly firmer U.S. bond yields helped the dollar recover from two-week
lows against the yen. The Bank of Japan's decision to hold monetary policy
steady underpinned the Japanese currency, though the outcome was widely expected
and factored into positions.
There was little price movement around Governor Haruhiko Kuroda's remarks at
a news conference afterwards and traders said the yen looked pinned in between
101.70 and 102.20 yen per dollar.
"Deeply negative real rates in Japan will force savers to look offshore for
better returns," said Kit Juckes, an analyst with Societe Generale in London.
"But while that leaves me thinking the yen will weaken further in due course, we
could be in low-volatility range trading for a very long time."
The dollar added 0.25 percent on the day to buy 101.96 yen, after
dropping as low as 101.60 yen on Thursday. The euro rose by just over 0.3
percent to 138.31 yen.
Against the dollar, the euro was a touch higher at $1.3568, having
again resisted a push toward a four-month low of $1.3503 set last week after the
European Central Bank unveiled a package of monetary easing, becoming the first
major central bank to charge financial institutions for parking their funds with
The jury remains firmly out on whether there is much more near-term weakness
to come for the single currency, propped up by flows of capital into
higher-yielding southern euro zone bond markets, Germany's huge trade surplus
and a reordering of Asian central banks' reserves in favour of the euro.
(Editing by Ruth Pitchford)