* ECB rate talk was brief and did not receive broad support
* Fed widely expected to hike rates at policy meeting this
* Investors ponder Fed hikes at June, September meetings
TOKYO, March 13 The euro firmed to one-month
highs against the dollar in Asian trading on Monday, after some
European Central Bank policymakers raised the possibility of
hiking interest rates before bond purchases end.
The euro was up 0.2 percent at $1.0699, after rising
as high as $1.0701, its highest level since Feb. 9.
Some members of the ECB's Governing Council discussed the
possibility of higher interest rates at last week's policy
meeting, but talk on the issue was brief and did not receive
broad support, said two sources familiar with the discussion.
The euro's gains were limited by expectations that the U.S.
Federal Reserve would decide to raise interest rates at its
two-day policy meeting ending on Wednesday, after U.S. employers
hired workers at a robust pace in February.
The headline figure surpassed expectations and wages also
rose, though by less than some economists expected. Overall, the
non-farm payrolls report reinforced market expectations that the
Fed will hike interest rates this week despite slowing economic
Wage growth rose 0.2 percent, falling short of an expected
0.3 percent increase, which caused U.S. Treasury yields to
recede from last week's 12-week highs.
The benchmark 10-year U.S. yield was last at
2.580 percent in Asian trading, compared to its U.S. close on
Friday of 2.582 percent. It was well below Friday's high of
2.624 percent, which was its highest since December.
Fed fund futures prices showed investors pricing in more
than a 90 percent chance of an increase in U.S. overnight
interest rates, according to CME Group's FedWatch tool.
With a rate increase so broadly priced in to market
expectations, investors have moved on to the next question of
whether the Fed will be able to sustain its pace of hikes and
also increase rates in its June and September meetings.
"Everyone wants to see the economic projections of FOMC
members, to gauge whether they will indeed stick to a path of
raising interest rates in both June and September," said Ayako
Sera, market strategist at Sumitomo Mitsui Trust Bank in Tokyo.
A Reuters poll of 23 primary dealers showed a dozen of them
expected the Fed to raise rates to 1.00 to 1.25 percent by its
June meeting, while 10 of them expected a rate increase by its
As market participants ponder the outlook for future
monetary policy moves, day-to-day trading this year has vexed
"It's hard to pick one specific theme in a market like
this," said Bart Wakabayashi, branch manager for State Street
Bank and Trust in Tokyo.
"It's hard to find trends, so I think people are mostly just
playing ranges, technicals and momentum," he said.
The dollar edged down 0.2 percent against its Japanese
counterpart to 114.66 yen, below Friday's high of 115.50
yen, which was the highest since Jan. 19.
Speculators had boosted bullish bets on the U.S. dollar in
the week through March 7, lifting net longs to their highest
level since early February, according to Commodity Futures
Trading Commission data released on Friday and calculations by
The dollar index, which tracks the U.S. currency against a
basket of six major rivals, slipped 0.1 percent to 101.13
, its lowest since Feb. 28.
Sterling added 0.2 percent to $1.2189, moving away
from last week's eight-week lows.
The pound lost almost 1 percent against the euro on Friday
after the ECB news. The single currency was last up 0.1 percent
at 87.83 pence after rising as high as 87.86 pence,
its loftiest peak since Jan. 17.
(Reporting by Tokyo markets team; Editing by Randy Fabi and Kim