* Dollar/yen edges up to 13-day high after upbeat U.S. ISM
* Sterling wallows in reach of 31-year low vs dollar
* RBA widely expected to stand pat on rates, Aussie steady
(Adds details, quotes)
By Shinichi Saoshiro
TOKYO, Oct 4 The dollar rose against the yen and
euro on Tuesday, boosted by some upbeat U.S. economic news,
while the pound wallowed near a three-decade low on concerns
over a potential "hard Brexit" for Britain.
The dollar added to overnight gains and was up 0.5 percent
at 102.150 yen after touching a 13-day high of 102.215.
The euro dipped 0.1 percent to $1.1204 after slipping 0.3
percent the previous day.
The greenback was on the front foot after data from the
Institute for Supply Management (ISM) showed on Monday that the
barometer for the U.S. manufacturing sector returned to
expansion in September.
"The market was relieved as ISM numbers had been weak
recently. There might be follow-through buying for the dollar,
but it could be difficult for the currency to break out of
recent range as the ISM data alone won't boost the case for the
Fed to continuously hike rates," said Shin Kadota, chief Japan
FX strategist at Barclays in Tokyo.
Fed funds futures imply that investors still see a very low
chance for the Federal Reserve to hike interest rates at its
next policy meeting in November, while the odds slightly favour
an increase in December.
Moreover, the currency market will have to navigate the U.S.
presidential election before focusing on the Fed's monetary
The dollar index rose 0.2 percent to 95.862.
The U.S. currency was particularly strong against the pound,
which has declined steadily since British Prime Minister Theresa
May set a March deadline for the UK's formal departure process
from the European Union to begin.
The March deadline offers some clarity to the process and
underpinned stocks, but many in the market worry that the
government's stance points to a "hard Brexit" where Britain
quits the single market in favour of retaining control over
Sterling steadied at $1.2831 after falling on
Monday to $1.2818, nearing the 31-year low of $1.2798 plumbed on
July 6 in the market turmoil following the late-June Brexit
While the post-referendum turmoil spurred demand for
safe-havens like the yen, analysts pointed out that the latest
slide in the pound is yet to trigger similar reaction.
"Right now the reaction to Prime Minister May setting a
departure deadline is mostly limited to the pound. A greater
negative impact on the British economy will have be witnessed
first for Brexit woes to cause broader risk aversion," said
Masafumi Yamamoto, chief currency strategist at Mizuho
Securities in Tokyo.
The Australian dollar was little changed at $0.7677,
awaiting the Reserve Bank of Australia's policy decision later
in the session for immediate cues.
The RBA is widely expected to stand pat and keep its cash
rate at a record low of 1.5 percent as Australia's biggest-ever
boom in apartment-building has helped support economic activity.
(Reporting by Shinichi Saoshiro; Editing by Eric Meijer)