* Dollar/yen climbs to near two-week high
* Dollar rises broadly, traders trim bearish bets
* Investors await Fed policy meeting, G20 summit
* Sterling falls after BoE report on exchange rates
(Updates prices, adds comment)
By Wanfeng Zhou
NEW YORK, Sept 21 (Reuters) - The U.S. dollar rose broadly
on Monday, hitting a near two-week high against the yen as
investors reduced bets against the greenback ahead of a
monetary policy meeting by the Federal Reserve this week.
The dollar rose more than 1 percent against the yen after
speculative flows pushed it higher, though the gains were
subsequently pared. Trading in Asia was quiet as financial
markets in several major cities were closed for holidays.
In the absence of key events or major economic data,
traders took profits on currencies that have rallied against
the dollar, including the euro, which has risen more than 2
percent so far this month.
"There are some thoughts in the markets that the (Federal
Open Market Committee) might announce that they're going to
start removing stimulus," said Chuck Butler, president of
Everbank World Markets in St. Louis. "That's why the dollar is
a little bit stronger.
"I don't think this is any trend reversal of what we've
seen from March on. This could just really be a correction.
Last week's run-up (in other currencies) was huge," he added.
The FOMC is widely expected to hold interest rates
unchanged between zero and 0.25 percent at the conclusion of
its two-day meeting on Wednesday, but traders will watch for
any clues about the central bank's exit strategy from the
current quantitative easing.
A withdrawal of stimulus would likely reduce the flow of
dollars into the economy. The currency has been on a downward
trend since the Fed launched its policy of buying Treasuries
last March.
In afternoon trading in New York, the ICE Futures dollar
index, which tracks the greenback versus a basket of six
currencies, rose 0.4 percent to 76.746 <.DXY>, after climbing
to 77.108, its highest level since Sept. 10.
Against the yen, the dollar <JPY=> was up 0.8 percent at
92.05 yen, near a peak of about 92.53 yen, its highest since
Sept. 9, according to Reuters charts.
Traders said there were sell orders from Japanese exporters
above 92.50 yen, capping any dollar/yen rally until Tokyo
markets reopen on Thursday.
POUND FALLS, G20 AWAITED
The euro <EUR=> slipped 0.3 percent to $1.4672, easing from
$1.4766 hit late last week, which was its strongest since
September 2008, according to Reuters data.
Analysts said some investors were concerned that short
dollar positions have become overstretched, suggesting a
near-term correction may be in store.
Net short dollar positions -- bets that the U.S. currency
will fall -- rose last week to their highest since March 2008,
according to the Commodity Futures Trading Commission.
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"We have also seen from the speculative positioning an
increase in dollar shorts, in particular euro longs," said
Vassili Serebriakov, currency strategist at Wells Fargo in New
York. "So it's not surprising to see that outstanding short
exposure is being scaled back."
The pound hit a five-month low versus the euro at 90.78
pence <EURGBP=> after the Bank of England said the pound's
long-run sustainable exchange rate may have fallen due to an
increased focus on Britain's economic imbalances.
[].
The dollar also benefited from waning risk appetite as the
pan-European FTSEurofirst 300 index <> fell below the
1,000 level. U.S. stocks also traded mostly lower.
Investors awaited a summit of the Group of 20 rich and
developing nations in Pittsburgh later in the week. Bankers'
pay and the need to examine strategies for withdrawing state
stimulus from the global economy have dominated debate ahead of
the meeting. See [].
Boris Schlossberg, director of currency research at GFT
Forex in New York, said rhetoric ahead of the event sparked
some profit-taking in risky assets and news of further
government regulation of capital markets could fuel risk
aversion.
(Additional reporting by Gertrude Chavez-Dreyfuss; Editing by
Dan Grebler)
