* Bargain hunting helps dollar gain vs yen, euro
* Yen shows little reaction to slip in Japan CPI
* Rebound in US debt yields supports dollar
* Aussie, kiwi inch back towards 7-month lows
By Shinichi Saoshiro
TOKYO, Dec 27 The dollar inched up against the
yen and euro on Tuesday as some investors emerged out of the
holiday lull to hunt for bargains as the market entered the last
trading stretch of the year.
The euro slipped 0.2 percent to $1.0435 after
climbing overnight to $1.0469.
The dollar was up 0.3 percent at 117.420 yen after
slipping to a six-day low near 117.000 the previous day in
reaction to slightly lower U.S. yields. The 10-year Treasury
note yield rebounded from the previous day's decline
to shore up the dollar.
The yen showed little reaction to Japan's inflation data,
which saw core consumer prices mark the ninth straight month of
annual declines in November.
Movements were limited with financial markets in Sydney,
Hong Kong and London still closed on Tuesday for the Christmas
"There isn't much in the form of fresh incentives moving the
market right now. The dollar is seeing some participants buy on
dips that formed as it sagged through the Christmas break," said
Koji Fukaya, president of FPG Securities in Tokyo.
The U.S. currency had climbed to a 10-month high of 118.660
yen mid-month on the back of the Trump rally, during which it
benefited from expectations of higher interest rates to match
the incoming president's stimulatory economic policies.
But the dollar, which surged more than 10 percent against
the yen since Trump's U.S. election win in November, has
recently lost some of its momentum.
Some in the market now expect a deeper downward correction
to grip the greenback, with the rise in U.S. debt yields slowing
and concerns over Trump's protectionist statements taking some
shine off the dollar.
"Trump's policies are understood to be conducive to
inflation and a stronger currency. But a higher dollar would be
a significant setback to the U.S. economy seemingly in the
ending stages of an expansion," wrote Makoto Noji, senior
strategist at SMBC Nikko Securities.
"Therefore, the Trump administration and the Federal Reserve
would have to stick to a cautious monetary policy stance to
prevent the dollar from appreciating excessively. We thus expect
a very gradual downtrend for dollar/yen."
For now the dollar index added 0.1 percent to 103.100
, clawing back towards a 14-year high of 103.650 marked a
The Australian dollar was down 0.3 percent at $0.7175
, inching back towards a seven-month low of $0.7160
plumbed late last week on concerns over China's economic growth.
The New Zealand dollar fell 0.2 percent to $0.6882,
paring the gains made the previous day. The kiwi was close to
$0.6863, a near seven-month trough plumbed on Friday against the
broadly stronger dollar.
The U.S. currency also rose against the pound, which slipped
0.2 percent to $1.2272, putting it closer to a
1-1/2-month low of $1.2230 set on Friday.
(Reporting by Shinichi Saoshiro; Editing by Eric Meijer)