October 4, 2018 / 6:48 PM / 16 days 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

 (Adds inflation focus, updates prices)
    By Karen Brettell
    NEW YORK, Oct 4 (Reuters) - The U.S. dollar weakened against the euro and yen on Thursday but stayed
near recent highs 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. "Right now it's whether those technical breaks are
sustainable."
    The dollar has outperformed on strong U.S. growth while economic data in other large economies,
including the eurozone, has come in below expectations.
    Investors are watching for signs of increasing U.S. inflation as companies, including Amazon,
raise minimum wages, and after jobs data last month showed that wages notched their largest annual
increase in August in more than nine years.
    U.S. jobs data on Friday for September will give new indications of wage growth and labor market
strength.
    Powell on Wednesday talked up the U.S. economy a day after hailing a "remarkably positive outlook,"
saying that the United States is on the verge of a "historically rare" era of ultra-low unemployment and
tame prices.
    The yen weakened to 114.54 yen against the dollar earlier on Thursday, its lowest in 11 months,
before retracing to 113.79.
    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 Wednesday.
    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 2:25PM (1825 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1504        $1.1476     +0.24%         -4.10%      +1.1541     +1.1464
 Dollar/Yen       JPY=        113.7900       114.5300    -0.65%         +0.99%      +114.5400   +113.6400
 Euro/Yen         EURJPY=     130.91         131.45      -0.41%         -3.16%      +131.5700   +130.7500
 Dollar/Swiss     CHF=        0.9924         0.9922      +0.02%         +1.86%      +0.9933     +0.9897
 Sterling/Dollar  GBP=        1.3016         1.2938      +0.60%         -3.67%      +1.3040     +1.2923
 Dollar/Canadian  CAD=        1.2929         1.2867      +0.48%         +2.80%      +1.2937     +1.2857
 Australian/Doll  AUD=        0.7068         0.7102      -0.48%         -9.40%      +0.7112     +0.7066
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1417         1.1390      +0.24%         -2.33%      +1.1435     +1.1368
 Euro/Sterling    EURGBP=     0.8837         0.8868      -0.35%         -0.54%      +0.8876     +0.8836
 NZ               NZD=        0.6474         0.6513      -0.60%         -8.64%      +0.6519     +0.6475
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        8.2539         8.2241      +0.36%         +0.57%      +8.2597     +8.2150
 Euro/Norway      EURNOK=     9.4988         9.4434      +0.59%         -3.55%      +9.5010     +9.4385
 Dollar/Sweden    SEK=        9.0587         9.0517      +0.31%         +10.45%     +9.0723     +9.0286
 Euro/Sweden      EURSEK=     10.4220        10.3901     +0.31%         +5.92%      +10.4410    +10.3780
 
    

 (Editing by Dan Grebler)
  
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