July 14, 2014 / 5:56 AM / 4 years ago

FOREX-Dollar firms in subdued trade as market awaits Yellen

* Euro steady as ECB's Draghi to speak later in the session
    * Bank of Japan, ZEW, China data, earnings feature this week
    * Aussie dollar wary after Stevens again talks down currency
    * Fed's Yellen to testify at Congress on Tues and Wed

    By Lisa Twaronite and Ian Chua
    TOKYO/SYDNEY, July 14 (Reuters) - The dollar edged up
slightly against its Japanese counterpart on Monday though major
currency pairs largely stuck close to recent ranges, as
investors awaited events this week including Federal Reserve
Chair Janet Yellen's congressional testimony for cues on the
outlook for U.S. monetary policy.
    A batch of Chinese economic data on Wednesday and earnings
results from major global banks this week kept investors wary,
and gave them little incentive to take new positions.
    Investors also awaited a policy review by the Bank of Japan
on Tuesday, though the central bank was widely expected to
maintain its policy and its broader economic outlook.
     The BOJ next week may trim its economic growth forecast for
the current year, sources familiar with its thinking said,
reflecting soft exports and a bigger-than-expected slump in
household spending after a sales tax hike in April, though the
change would not tip any policy changes to come. 
    "There hasn't been significant structural change that
requires measures from them," said Bart Wakabayashi, head of
foreign exchange for State Street Global Markets in Tokyo.
    "I'm surprised dollar-yen is as bid as it is," he added, in
light of a lack of trading incentives.
    The dollar index edged slightly higher to 80.217,
inching away from a two-month low of 79.740 on July 1. 
    Speculators increased their bullish bets on the U.S. dollar
in the latest week, with the value of the dollar's net long
position rising to $10.34 billion in the week through July 8,
according to the latest data from the Commodity Futures Trading
Commission released on Friday. 
    The total value of positions rose from $8.65 billion the
previous week when it was the smallest net long on the dollar in
five weeks.
    The euro, meanwhile, was steady at $1.3604, having
wobbled on either side of $1.3600 in the past week.
    European Central Bank President Mario Draghi is scheduled to
give an introductory statement at the quarterly hearing before
the Committee on Economic and Monetary Affairs of the European
Parliament later in the day.
    Investors also awaited the July ZEW survey on economic
sentiment on Tuesday to gauge the impact of the Ukraine crisis
on German confidence.
    Against the yen, the greenback rose about 0.2 percent to
101.43, moving further off a seven-week trough of 101.06
yen plumbed last Thursday. The euro was flat on the day at
137.97 yen, recovering from last week's fall to a
five-month low of 137.50 yen.
    Demand for the safe-haven yen faded on Friday as concerns
eased about the health of Portugal's largest bank and its impact
on the euro zone financial system. 
    Traders said dollar bulls are unlikely to get too excited
ahead of Yellen's testimony on Tuesday and Wednesday.
    "If her recent public statements are any indication, expect
no discomfort from the current stance of accommodative monetary
policy," analysts at JPMorgan wrote in a note to clients.
    They also expect Yellen to defend the principle that
financial stability should remain primarily in the remit of
regulators, while central banks should focus on macroeconomic
     The Australian dollar, meanwhile, kept its head down after
the country's central bank chief again said the currency was too
    In an interview with the Weekend Australian published late
last week, Reserve Bank of Australia Governor Glenn Stevens
reiterated that some investors may be underestimating the risk
of "a material decline" in the currency at some point.
    The Aussie last traded at $0.9395, slightly higher
on the day having dipped as low as $0.9370. Similar remarks from
Stevens early this month saw the Aussie slide as far as $0.9327.

 (Editing by Eric Meijer and Richard Borsuk)
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