* Dollar/yen comes within reach of 112.00 threshold
* Mnuchin repeats support for ultra long-term bond issuance
* Euro holds ground before May 7 French vote
* RBA keeps rates at 1.5 pct as expected, Aussie little
(Updates prices, adds details and quotes)
By Shinichi Saoshiro
TOKYO, May 2 The dollar hit a one-month high
against the yen on Tuesday, lifted by Treasury yields which
surged after U.S. Treasury Secretary Steven Mnuchin commented on
the possibility of ultra long-term bond issuance.
The greenback last traded at 111.900 yen after
touching 111.985, its strongest since March 31.
The dollar was boosted as long-term Treasury yields soared
to multi-week highs after Mnuchin reiterated his view in an
interview with Bloomberg, saying the government issuing debt
exceeding 30-years in maturity "can absolutely make sense."
"The dollar is moving in tandem with Treasury yields, which
saw its benchmark rise above the 2.3 percent threshold with
Mnuchin seemingly very enthusiastic about issuing so-called
ultra long-term bonds," said Yukio Ishizaki, senior currency
strategist at Daiwa Securities.
The jump in U.S. debt yields helped the dollar brush off
negative pressure from downbeat data.
The latest U.S. economic indicators to be released remained
underwhelming. A survey out on Monday showed factory activity
slowed in April, while data showed consumer spending was
unchanged in March, and an important inflation measure fell on a
monthly basis for the first time since 2001.
Other U.S. data out later this week include an ADP
employment report on Wednesday, durable goods orders on Thursday
and a non-farm jobs report on Friday.
Despite the lacklustre data, the dollar has managed to rise
due to expectations that the Federal Reserve would hike interest
rates again soon, but it the indicators ramin weak investors
could revise their expectations, said Junichi Ishikawa, senior
forex strategist at IG Securities in Tokyo.
"If this week's remaining U.S. indicators continue to be
weak, such expectations that have supported the dollar could
The Federal Reserve is widely expected to keep interest
rates unchanged at a two-day policy meeting that begins on
Tuesday, and investors will look to see whether the central bank
downlplays the recent soft patch in the economy to leave the
door open for a rate increase in June.
The euro, meanwhile, held its ground against the dollar. The
common currency was up 0.15 percent at $1.0914, adding to
modest gains made overnight.
It was in reach of a 5-1/2-month high of $1.0951 scaled last
week on relief after Emmanuel Macron's victory against anti-euro
nationalist Marine Le Pen in the first round of France's
presidential elections. The runoff vote is on May 7.
"The euro was initially expected to become volatile as the
May 7 French vote neared, but it is still holding very firm.
With French equities also at record highs, it appears that the
market is treating Macron's win as a foregone conclusion,"
Ishizaki at Daiwa Securities said.
The euro touched a 1-1/2-month high of 122.200 yen
, with the safe-haven Japanese currency broadly on the
defensive amid a recent ebb in broader risk aversion.
U.S. President Donald Trump said on Monday he was open to
meeting North Korean leader Kim Jong Un in the right
The Australian dollar gained about 0.3 percent higher at
$0.7548 thanks to a bounce in iron ore prices, and
showed little reaction to the Reserve Bank of Australia keeping
its policy rate unchanged at a record low 1.5 percent.
The RBA's decision on Tuesday was expected.
The U.S. dollar index against a basket of major
currencies was effectively flat at 99.050 after posting a small
(Reporting by Shinichi Saoshiro; Editing by Simon