* USD up on hawkish comments from Fed official, higher US
* Pound remains on defensive, plumbs fresh 31-year low
* Euro steadies after surging on report about ECB policy
By Shinichi Saoshiro
TOKYO, Oct 5 The dollar hovered near a two-month
high against a basket of currencies on Wednesday, lifted by
hawkish comments from a Federal Reserve official and a sharp
rise in U.S. Treasury yields.
The pound marked fresh three-decade lows amid lingering
concerns that Britain's approach towards exiting the European
Union could have grave economic consequences.
The dollar index stood at 96.116, in sight of 96.442,
its highest since Aug. 9.
The greenback was already on a strong footing after rallying
at the start of the week on an upbeat survey of the U.S.
It got an additional lift after Richmond Federal Reserve
President Jeffrey Lacker said on Tuesday there was a strong case
for raising interest rates and as Treasury yields rose to
two-week highs in response to a surge in euro zone debt
The dollar inched down 0.2 percent to 102.705 yen
after rising to a three-week high of 102.965 overnight, when it
posted its sixth straight day of gains versus its Japanese peer.
"The U.S. dollar should continue to outperform but after six
straight days of gains, traders should beware of a correction in
USD/JPY ahead of Friday's non-farm payrolls report," wrote Kathy
Lien, managing director of FX strategy for BK Asset Management.
Lien added a move by the dollar down to 102.50 yen would
give traders an opportunity to reload their long positions
before the U.S. jobs report.
The dollar's strength came in part from its gains against
the pound, which slipped to a fresh 31-year trough of $1.2721
after shedding about 0.9 percent the previous day.
Many in the market worry that the British government's
stance points to a "hard Brexit," in which Britain splits
entirely from the single market in favour of retaining control
over immigration, which could drive an exodus of banks from
The euro was flat at $1.1209, catching its breath
after swinging wildly the previous day.
The common currency had slid on Tuesday to a low $1.1138
before climbing back to a peak $1.1239, along with a rise in
euro zone debt yields in response to a report of a European
Central Bank plan to taper its asset-purchase programme.
Bloomberg reported earlier on Tuesday that the ECB would
probably wind down its 80-billion-euro monthly bond purchases
gradually before ending its quantitative easing programme,
citing unnamed sources.
An ECB media officer tweeted later on Tuesday, however, that
the central bank's decision-making body has not discussed
reducing the pace of its monthly bond buying.
(Editing by Shri Navaratnam)