FOREX-Dollar rises vs yen after slide, Aussie climbs

By Masayuki Kitano

TOKYO, May 19 (Reuters) - The dollar inched higher against the yen on Monday, making up for some losses late last week when a plunge in U.S. consumer confidence stirred concerns about the outlook for the U.S economy.

The dollar fell on Friday after the Reuters/University of Michigan index of consumer confidence highlighted the threat to economic growth, dropping to the lowest level since June 1980. [ID:nN16406494]

The Australian dollar climbed to a 24-year peak around $0.9570 AUD=D4 on Monday in the wake of the U.S. data. The Aussie later trimmed its gains, falling 0.2 percent on the day to $0.9533.

Despite the weak reading on U.S. consumer confidence, market players' views on the dollar remained mixed.

There was no compelling reason to push the dollar below last week's one-month low near 102.60 yen, said Tokichi Ito, deputy general manager for the forex team at Trust & Custody Services Bank.

"The focus is on what kind of factors might push the dollar out of its recent ranges against the yen and when," Ito said.

"At this point, few people have a clear view on whether the dollar will break above its range or fall below it," he said, adding that on balance, pessimistic views on the U.S. economy have receded in recent weeks.

The dollar rose 0.1 percent from late U.S. trading on Friday to 104.17 yen JPY=.

Since early May, the dollar has traded between about 102.60 yen and 105.70 yen, having pulled up from a 13-year low of 95.77 yen hit on electronic trading platform EBS in mid-March.

The euro dipped around 0.1 percent from late in New York to $1.5561 EUR=.

EYES ON DATA

The Bank of Japan is widely expected to keep interest rates at 0.50 percent at a two-day policy meeting that ends on Tuesday. [ID:nT305710]

Traders were focusing on U.S. and euro zone data due later in the week, including a reading on U.S. producer prices and the German ZEW institute's economic sentiment index due on Tuesday. The Ifo economic institute's index of German business sentiment to be released on Wednesday is another focal point.

The surprisingly steep fall in U.S. consumer confidence slightly tempered market expectations for the Federal Reserve to raise interest rates later in the year. FEDWATCH

U.S. short-term interest rate futures show a roughly 80 to 85 percent chance of the Fed raising rates by 0.25 percentage point to 2.25 percent by the end of the year. They had been fully pricing in such an increase before the consumer confidence data.