* Major currencies in tight range on Monday with Tokyo off
* Dollar holds Friday's rally, still short of recent peaks
* U.S. wage growth lifts yields, but jury out on reflation
By Wayne Cole
SYDNEY, Jan 9 The dollar got off to a steady
start on Monday after signs of wage pressure in the December
U.S. jobs report pushed up Treasury yields, but bulls were wary
of a setback following last week's wave of profit-taking.
A holiday in Tokyo kept trading light, and the dollar index
was just a fraction firmer in early trade at 102.26, near
the middle of last week's wide 101.30 to 103.82 range.
The dollar was perched at 117.07 yen, having
recovered all the way from a 115.06 trough on Friday, but
remained well short of the next major chart target around
The euro stood at $1.0527, after ricocheting between
$1.0339 and $1.0621 last week.
There were enough hints of inflationary pressure in Friday's
mixed U.S. payrolls report to support the case for more interest
rate hikes and reverse a down move in yields and the dollar.
Yields on U.S. 10-year notes rose from 2.33
percent to 2.42 percent on the data. Yet that remained some way
from the December peak of 2.64 percent, and the spread over
German yields was also off its highs.
"It is interesting to note that while there has been some
volatility in the meantime, U.S. equities, the USD, and 10-year
yields are all sitting at roughly similar levels to when the Fed
hiked nearly four weeks ago," said analysts at ANZ.
"It does look like markets are asking whether the reflation
theme is now in the price, suggesting that something additional
will be needed to set markets into new trading ranges."
The outlook for U.S. rates may become a little clearer when
Federal Reserve Chair Janet Yellen appears at a webcast town
hall meeting with educators on Thursday.
Two regional Fed presidents will speak later Monday, and
there are no less than five speeches lined up for Thursday. The
main economic release of the week is not until Friday, when
retail sales figures for December are out.
Dealers in Asia will also be keeping a wary eye on the yuan
after Beijing engineered a sharp tightening in liquidity
last week that squeezed speculators out of short yuan/long U.S.
Figures out over the weekend showed China's foreign exchange
reserves fell to nearly six-year lows in December as Beijing
fought to stem an outflow of capital that could ultimately force
another devaluation of the currency.
(Editing by Lisa Von Ahn)