(Updates prices, adds comments; changes byline, dateline, pvs
* Traders optimistic Fed will hint Wednesday at June rate
* Traders discount soft U.S. economic data
* Dollar pares gains vs yen after touching 112.30 yen
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Sam Forgione
NEW YORK, May 2 The U.S. dollar hit a six-week
high against the yen on Tuesday as traders discounted weak U.S.
economic data and anticipated that the Federal Reserve would
prepare markets for an interest rate increase in June in its
The dollar hit 112.30 yen, its highest since March
21, despite data on Monday showing weak U.S. factory activity
and inflation and last week's release of U.S. first-quarter
gross domestic product, which showed the weakest performance in
Analysts said the data was not enough to stifle risk
appetite, which in turn hurt the safe-haven yen. Some analysts
also said the closure of Tokyo markets for the Golden Week
holidays was contributing to a lack of liquidity in the yen,
which exacerbated its weakness against the dollar and the euro.
"It’s just a good old-fashioned risk-on trade, which
correlates with the yen weakening," said Richard Scalone,
co-head of foreign exchange at TJM Brokerage in Chicago.
The weakness in U.S. economic data has not altered
expectations that the Fed will hike interest rates in June,
analysts have said. That, in turn, has boosted the dollar
against the yen and kept it relatively stable against the euro.
The euro was last mostly flat against the dollar at $1.0901
. The dollar was last up 0.3 percent against the yen at
112.13 yen, not far from its six-week high.
Along with the Fed statement, traders were awaiting Friday's
U.S. April non-farm payrolls report from the U.S. Labor
Department. Economists polled by Reuters expect U.S. employers
to have added 185,000 jobs last month, up from March's 98,000.
Optimism for Friday's jobs data and the likelihood that the
Fed on Wednesday would prepare markets for rate increases
boosted the dollar against the yen, said Sireen Harajli, FX
strategist at Mizuho in New York.
"Even though we're seeing this softer tone coming out of the
data, I think markets are still expecting positive figures,"
Harajli said. She said, however, that muted activity in currency
markets still indicated some caution ahead of the jobs report
and Fed statement.
The dollar index, which measures the greenback
against a basket of six major rivals, was last up 0.1 percent at
(Reporting by Sam Forgione; additional reporting by Patrick
Graham in London; editing by Grant McCool)