October 4, 2018 / 2:22 PM / 7 months ago

FOREX-Dollar near 11-month highs against yen as bond yields surge

    * Dollar hits 11-month highs against Japanese yen
    * Euro recovers after breaching technical support

 (New throughout, updates prices, market activity and comments
to U.S. market open, new byline, changes dateline, previous
    By Karen Brettell
    NEW YORK, Oct 4 (Reuters) - The U.S. dollar weakened on
Thursday but stayed near recent highs against the euro and yen,
as investors evaluated the impact of a global government bond
rout that has lifted  benchmark U.S. Treasury yields to
seven-year peaks.
    Strong economic data and hawkish speeches by Federal Reserve
officials including Chairman Jerome Powell spooked investors on
Wednesday and caused U.S. Treasury yields and the euro/dollar
currency pair to breach key technical levels.
    “Markets are still trying to figure out what’s driving
things,” said Mark McCormick, North American head of FX strategy
at TD Securities in Toronto.
    “You’re getting a global selloff in rates at the exact same
time as you’re getting a rise in global equities,” McCormick
said. “It’s a combination that’s not very good for the yen, but
it’s also a combination that I don’t think is very sustainable.”
    The dollar has outperformed as U.S. growth remains strong
while economic data in other large economies including the
eurozone has come in below expectations.
    The Institute for Supply Management's (ISM)
non-manufacturing activity index jumped 3.1 points to 61.6 last
month, the highest reading since August 1997, and the ADP
National Employment Report showed U.S. private payrolls rose by
230,000 jobs in September, the most since February.
    The data comes before the widely watched monthly U.S. Labor
Department payrolls report on Friday.
    Powell on Wednesday continued to talk up U.S. economic
strength a day after hailing a "remarkably positive outlook" for
the U.S. economy, which he said is on the verge of a
"historically rare" era of ultra-low unemployment and tame
    The yen weakened to 114.53 yen against the dollar
earlier on Thursday, its lowest in 11 months, before retracing
to 114.00.
    The Japanese currency was helped by a Reuters report that
the Bank of Japan will tolerate further increases in super-long
yields as long as the increase does not push 10-year yields well
above its zero percent target.
    The greenback is facing strong technical resistance against
the yen between 114.32 and 114.73, Citigroup technical analysts
wrote in a report on Thursday, which may make investors cautious
about further dollar gains.
    The euro also recovered from six-week lows against
the dollar, after breaching technical support at around $1.15 on
    The single currency has been hurt by uncertainty surrounding
Italy's debt, fiscal plans and future ties with Europe, which
have unnerved markets and exacerbated tensions with other
eurozone leaders.
    Currency bid prices at 9:58AM (1358 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1514        $1.1476     +0.33%         -4.02%      +1.1527     +1.1464
 Dollar/Yen       JPY=        114.0000       114.5300    -0.46%         +1.18%      +114.5400   +114.0100
 Euro/Yen         EURJPY=     131.28         131.45      -0.13%         -2.89%      +131.5700   +131.0200
 Dollar/Swiss     CHF=        0.9915         0.9922      -0.07%         +1.76%      +0.9926     +0.9901
 Sterling/Dollar  GBP=        1.3014         1.2938      +0.59%         -3.69%      +1.3018     +1.2923
 Dollar/Canadian  CAD=        1.2864         1.2867      -0.02%         +2.28%      +1.2888     +1.2862
 Australian/Doll  AUD=        0.7084         0.7102      -0.25%         -9.19%      +0.7112     +0.7066
 Euro/Swiss       EURCHF=     1.1420         1.1390      +0.26%         -2.32%      +1.1435     +1.1368
 Euro/Sterling    EURGBP=     0.8846         0.8868      -0.25%         -0.42%      +0.8876     +0.8846
 NZ               NZD=        0.6497         0.6513      -0.25%         -8.31%      +0.6519     +0.6484
 Dollar/Norway    NOK=        8.2262         8.2241      +0.03%         +0.23%      +8.2448     +8.2151
 Euro/Norway      EURNOK=     9.4720         9.4434      +0.30%         -3.82%      +9.4844     +9.4385
 Dollar/Sweden    SEK=        9.0334         9.0517      +0.13%         +10.14%     +9.0723     +9.0286
 Euro/Sweden      EURSEK=     10.4031        10.3901     +0.13%         +5.73%      +10.4100    +10.3780
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