* Uncertainty over Fed stimulus moves boosts dollar
* U.S. GDP data slightly better than expected
* Yen hurt by caution over possible intervention
(Add details, updates prices)
By Nick Olivari
NEW YORK, Aug 27 (Reuters) - The dollar rose against the
yen and the Swiss franc on Friday after U.S. Federal Reserve
Chairman Ben Bernanke said the Fed was prepared to provide
stimulus to boost a U.S. economic recovery that had slowed more
than expected, but did not say how or when.
Analysts said the dollar would remain supported because
Bernanke gave no firm commitment the central bank would provide
additional easing, which could put downward pressure on
interest rates.
The Fed also did not make clear what would prompt such
measures, they noted. For details on Bernanke's remarks, see
[]
"Net-net, all Bernanke said was expected. He didn't change
his position and stopped short of committing to another round
of quantitative easing," said Boris Schlossberg, a director of
currency research at GFT Forex, in New York. "The major
currencies will remain within the trading patterns they had
established before his remarks: the yen is weakening and the
dollar is somewhat supported against the euro."
In midafternoon trading in New York, the dollar was up 1.1
percent against the yen <JPY=> at 85.35 yen after climbing as
high as 85.49 yen, while the euro see-sawed but last traded up
0.1 percent at $1.2733 <EUR=>.
Comments from European Central Bank Governing Council
member Axel Weber on Friday that Europe is on the brink of a
self-sustaining recovery added to the euro's allure.
[]
The dollar hit a session high earlier against the Swiss
franc at 1.0300 francs <CHF=> and last traded up 0.4 percent at
1.0277 francs.
The dollar got a lift earlier in the session after the
government released its revision for second-quarter U.S. GDP
growth, with figures that were slightly better than market
expectations. []
The GDP report helped push benchmark Treasury yields
higher, boosting the return on U.S.-denominated assets.
Government debt prices extended their earlier losses on
Bernanke's comments.
The Fed announced plans earlier this month to boost the
flagging economy by reinvesting money from maturing mortgage
bonds in government debt.
YEN WARY
Meanwhile, traders trimmed long positions on the Japanese
currency after a rally earlier this week pushed the yen to its
highest level in 15 years and led Japan's prime minister to
reiterate a threat to take steps to stem its advance.
A media report that Prime Minister Naoto Kan was to hold a
news conference sparked profit-taking in dollar/yen short
positions, traders said.
Kan said he would take firm action on currencies when
needed and that he would meet Bank of Japan Governor Masaaki
Shirakawa when the central bank chief returns from an overseas
trip. []
Shirakawa traveled to Jackson Hole, Wyoming, for the Fed
conference and will return to Tokyo on August 30.
[].
Analysts and traders said Kan seemed to play down the
prospect of imminent action but they remained wary with the
currency so close to 15-year highs versus the dollar, with the
rapidity of any move in the yen seen as key.
"I don't think we'll see intervention around current levels
unless we get a disorderly move where dollar/yen falls sharply,
say by three yen, during one day," said Gavin Friend, currency
strategist at nabCapital in London.
Despite the risk of possible action by Japanese authorities
to curb yen strength, such as yen-selling intervention or
monetary easing by the Bank of Japan, some traders and
investors say the yen could still test a record high of 79.75
yen to the dollar, hit in April 1995.
A buy signal on the dollar against the yen was triggered on
Friday when the 12- and 26-day moving average convergence
divergence line rose above the 9-day signal line. The MACD was
last at -0.67, with the signal line at -0.71.
The MACD is used in technical analysis as an indicator of
short-term momentum by focusing on exponential moving averages
and closing prices.
(Additional reporting by Neal Armstrong in London)
(Reporting by Nick Olivari and Vivianne Rodrigues; Editing by
Dan Grebler)
