* Rise in U.S. Treasury yields help support greenback
* Aussie dollar firmer after solid Australia jobs data
* Focus on Trump’s choice for next Fed chair
* Investors eye weekend election in Japan
By Lisa Twaronite and Masayuki Kitano
TOKYO/SINGAPORE, Oct 19 (Reuters) - The dollar hit its highest in about two weeks against the yen on Thursday, supported by this week’s rise in U.S. bond yields, with the market’s attention turning to who will next lead the Federal Reserve and this weekend’s Japanese election.
The dollar index, which tracks the U.S. currency against a basket of six major rivals, was slightly higher on the day at 93.389.
The dollar rose as high as 113.095 yen in early Asian trade, its strongest level since Oct. 6. The dollar last changed hands at 112.97 yen, steady from late U.S. trade on Wednesday.
This week’s rise in U.S. bond yields helped lend support to the greenback. The two-year U.S. Treasury yield rose to its highest since November 2008 on Wednesday on the back of expectations for tighter global monetary policy.
The benchmark U.S. 10-year Treasury yield touched a one-week high of 2.352 percent on Wednesday, and last stood at 2.342 percent, having risen six basis points so far this week.
“In order for expectations of tighter U.S. monetary policy to increase, we will need to see more evidence to confirm that U.S. inflation is rising,” said Kumiko Ishikawa, FX analyst at Sony Financial Holdings in Tokyo.
The dollar’s rise against the yen was likely to be capped by uncertainty ahead of this weekend’s election in Japan.
Most polls show Japanese Prime Minister Shinzo Abe’s coalition on track to secure a roughly two-thirds majority in Sunday’s general election, ushering in continued political and monetary stability.
“To be sure, the chances of an election surprise in Japan are indeed very small. But investors remember last year’s Brexit vote and the U.S. presidential election, so there is greater uneasiness around elections now,” Ishikawa said.
With the Federal Reserve expected to raise interest rates for the third time this year in December, markets are now looking for clarity on who will lead the U.S. central bank after Fed Chair Janet Yellen’s term expires next February.
President Donald Trump will announce his decision on who will be the chair of the Federal Reserve in the “coming days,” White House spokeswoman Sarah Sanders said on Wednesday.
Trump has an interview scheduled on Thursday with current Chair Yellen. She is one of five candidates Trump is considering for the job.
The dollar has gained a boost this week after Stanford University economist John Taylor emerged as a major candidate for the next Fed chair.
“If it turns out to be Taylor, that is likely to trigger selling of (U.S.) bonds, at least initially,” said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.
The dollar could edge higher against the yen under that scenario, Okagawa added.
Taylor is known as a proponent of a rule-based monetary policy and according to his formula, known as the Taylor rule, the Fed funds rate needs to be much higher than the current target of 1.0-1.25 percent.
Thus there is speculation that the Fed may start raising interest rates at a faster pace, if Taylor becomes the Fed chief.
The euro edged up percent to $1.1799.
One focus for the euro is the European Central Bank’s policy meeting coming up nex0.1t week.
France’s central bank governor called on Wednesday for a reduction in the ECB’s bond purchases towards “their possible end” in light of stronger inflation, while saying monetary policy should stay easy.
Easy monetary policy gives euro zone governments a window of opportunity to enact the reforms needed to boost growth once interest rates have to rise, ECB President Mario Draghi said on Wednesday.
The Australian dollar edged higher after Australian jobs data for September came in stronger than expected.
The Australian dollar rose 0.1 percent to $0.7850, pulling away from Wednesday’s intraday low of $0.7819.
Against the yen, the Australian dollar rose to 88.87 yen at one point, its highest level since late September.
Economic data from China was largely in line with expectations. The Australian currency is sensitive to China developments because of the two countries’ massive trade relations.
China’s economic growth slowed slightly as expected in the third quarter as the government’s efforts to rein in the property market and debt risks tempered activity in the world’s second-largest economy.
In other data, China’s industrial output rose a stronger-than-expected 6.6 percent in September from a year earlier, while retail sales also outperformed, though investment growth eased more than expected and property sales fell for the first time in more than two years. (Reporting by Lisa Twaronite and Masayuki Kitano; Editing by Sam Holmes and Jacqueline Wong)