Dollar supported, traders await Fukui, U.S. data

TOKYO, June 15 (Reuters) The dollar held near a 4 1/2-year high on Friday, boosted by a climb in U.S. Treasury yields to a five-year high this week and as investors found a renewed appetite for risk and continued to sell the low-yielding yen.

Traders awaited U.S. price data later in the day to see if Treasury yields would rise further, as well as comments by Bank of Japan Governor Toshihiko Fukui after a policy meeting at which the central bank is widely expected to hold rates at 0.5 percent.

The dollar jumped above the psychologically important 122.20 yen level this week as investors abandoned the possibility of a Federal Reserve rate cut this year, prompting a Treasury sell-off that drove the benchmark 10-year yield to its highest since 2002.

''The dollar has cleared a key hurdle against the yen, which is attracting more buying,'' said Nobuo Ibaraki, a forex manager at Nomura Trust and Banking.

The dollar hovered around 123.00 yen little changed from levels late in New York, after climbing to 123.13 yen on Thursday.

The euro was flat at $1.3310 not far from $1.3264 hit earlier in the week for the first time since late March.

The yen stayed under downward pressure as investors warmed to riskier trades that use low-yielding currencies like the yen to fund investments in higher-yielding assets overseas, after many stock and bond markets stabilised after tumbling this week.

The euro inched up 0.1 percent to 163.70 yen pulling away from a one-month low hit earlier this week.

Traders see the dollar extending its gains and say it could climb towards 125 yen in the near term, particularly if figures on U.S. core consumer prices due later in the day show inflation risks are rising as economic growth remains solid.

Core CPI is expected to have risen by a moderate 0.2 percent in May from April, when it rose by that amount.

Also due on Friday are U.S. industrial production figures and a consumer sentiment survey. Strong readings could signal ongoing growth in the U.S. economy, which would support the dollar.

Before the U.S data rush, traders awaited comments from the BOJ governor from a news conference expected to start at 0630 GMT.

Market participants expect the central bank to raise rates to 0.75 percent as early as August, and they want to see if Fukui says anything to bolster that view.

Even if he does and it boosts the yen, traders say yen gains would likely be short-lived as the BOJ is expected to take its time in raising rates and they will continue to lag those of other countries.

Reuters DKS VP0630