* Dollar supported with US yields near 3-month highs
* Wait-and-see mood before Fed meeting limits movements
* Hawkish-sounding comments from ECB officials temper euro
By Shinichi Saoshiro
TOKYO, March 14 The dollar inched up against a
basket of currencies on Tuesday as U.S. Treasury yields extended
their rise ahead of an expected interest rate hike by the
The euro pulled back from multi-week highs after
dovish-sounding comments from European Central Bank officials
tempered its recent surge.
With a rate increase already seen as a done deal, investor
focus was on what kind of a message the Fed would deliver after
its two-day meeting starting later on Tuesday.
"The latest rise in Treasury yields is underpinning the
dollar, but it is a wait-and-see mood that is mostly prevailing
in the market ahead of the Fed's decision," said Shin Kadota,
senior currency strategist at Barclays in Tokyo.
"Expectations for a hawkish dot plot was a factor that has
pushed up the dollar recently, with hopes for the number of
times the Fed could hike rates this year having increased to
four from three."
The "dot plot" is policymakers' rate projections and
provides a view into their interest rate outlook.
The dollar index against a group of major currencies
was up 0.1 percent at 101.440, adding to modest gains made the
The U.S. currency was up 0.1 percent at 114.950 yen,
having gone to 115.510 on Friday, its highest since Jan. 19.
The euro was 0.1 percent lower at $1.0647.
The common currency had climbed to a one-month high of
$1.0714 on Monday, boosted after some members of the ECB's
Governing Council discussed the possibility of higher interest
rates at last week's policy meeting.
But its rise was tempered later on Monday after ECB
Governing Council member Jan Smets reportedly said last week's
policy meeting was not a signal of coming policy change. Bank of
France Governor Francois Villeroy de Galhau also said rising
inflation in the euro zone was highly exaggerated.
Caution ahead of this week's elections in Holland also
capped the euro. The Dutch will vote on Wednesday in an election
that was seen as a test of anti-immigrant sentiment.
Sterling was little changed at $1.2211 after
gaining 0.4 percent overnight after Scotland's First Minister
Nicola Sturgeon demanded a fresh Scottish independence
referendum but said it should take place at the earliest in late
The Australian dollar was down 0.2 percent at $0.7559
, giving back some of the previous day's gains.
The 10-year U.S. Treasury note yield was at
2.620 percent after rising to 2.628 percent overnight, its
highest since mid-December.
(Editing by Randy Fabi)