By Hiroyuki Kachi 
 

The dollar hit a two-week high against the yen during Asia trade on Monday, after top officials of the U.S. Federal Reserve sent hawkish signals indicating a stronger case for raising short-term rates in the coming weeks or months.

The greenback advanced to Y102.28 in early afternoon, its highest level since Aug. 12, before giving up its earlier gains to change hands at Y102.24 at 0450 GMT. That was higher than Y101.82 late Friday in New York.

The euro was almost unchanged at $1.1204 midday from $1.1200 late Friday.

The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was up 0.06% at 86.54.

After strengthening to just below Y102.00 on Friday following hawkish remarks of the Fed officials, the dollar kept its upside momentum against the Japanese currency during Asia trade. Gains in Tokyo stocks helped to brighten sentiment, causing investors to sell the perceived safety of the Japanese currency. The Nikkei Stock Average rose 2.3% midday, marking its gains after a two-day losing streak.

Fed Chairwoman Janet Yellen said in remarks delivered in Jackson Hole, Wyo., on Friday, that she believes "the case for an increase in the federal-funds rate has strengthened in recent months." Separately, Fed Vice Chairman Stanley Fischer signaled in an interview that the Fed could raise interest rates as soon as next month.

Investors took the monetary policy differentials in the U.S. and Japan as cues to buy the dollar against the yen. Bank of Japan Gov. Haruhiko Kuroda said Saturday at the Fed's symposium that the central bank will take additional monetary easing measures "without hesitation" to achieve its inflation target.

"I don't think the dollar will go up rapidly," said Minori Uchida, head of Tokyo global markets research at Bank of Tokyo-Mitsubishi UFJ. "By any chance, there may be a rate increase in September. But it still remains uncertain where it goes from there."

"I think a weaker dollar and a higher yen will likely remain pervasive," said Mr. Uchida, adding that a moderate pace of rate increases won't make the dollar stronger than its peers due to the U.S. trade imbalance.

The dollar may get support against the yen on a vague sense of hope for U.S.-Japan monetary policy gaps in the run-up to the monetary policy meetings in the U.S. and Japan in September. "But that won't likely be the main mover," said Mr. Uchida.

The dollar could touch as high as Y105. But once investors find it difficult for the dollar to gain further, the U.S. currency may turn downward, he said.

In other currency trade, the euro was at Y114.56 from Y113.98.

 
 
Interbank Foreign Exchange Rates At 00:50 EST / 0450 GMT 
 
                           Latest       Previous   %Chg    Daily    Daily   %Chg 
Dollar Rates                               Close            High      Low  12/31 
 
USD/JPY Japan           102.24-25      101.82-83  +0.41   102.28   101.83 -15.01 
EUR/USD Euro            1.1203-06      1.1195-98  +0.07   1.1209   1.1189  +3.17 
GBP/USD U.K.            1.3121-23      1.3135-37  -0.11   1.3136   1.3111 -10.95 
USD/CHF Switzerland     0.9770-74      0.9780-84  -0.10   0.9787   0.9768  -2.48 
USD/CAD Canada          1.3001-06      1.3001-06   0.00   1.3026   1.3000  -6.03 
AUD/USD Australia       0.7550-54      0.7561-65  -0.15   0.7563   0.7525  +3.64 
NZD/USD New Zealand     0.7235-41      0.7235-41   0.00   0.7240   0.7210  +5.93 
 
Euro Rate 
 
EUR/JPY Japan           114.54-58      114.00-04  +0.47   114.58   114.01 -12.41 
 
Source: Tullett Prebon 
 

Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com

 

(END) Dow Jones Newswires

August 29, 2016 01:34 ET (05:34 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.