* Dollar/yen adds to overnight rally, rises to 9-day high
* Attention shifts back to US stimulus after Trump’s tax vow
* US-Japan summit awaited, with focus on currency talks
* Aussie lifted by upbeat China trade data, kiwi stabilises (Updates prices, adds details and quotes)
By Shinichi Saoshiro
TOKYO, Feb 10 (Reuters) - The dollar was buoyant on Friday, rising to a 1-1/2-week high versus the yen, on comments by U.S. President Donald Trump that he would announce the most ambitious tax reform plan since the Reagan era in the next few weeks.
The dollar was knocked back against the euro and yen this month as Trump focused on protectionist trade policies and appeared to back a weaker dollar since taking office.
On Thursday, Trump finally spoke on stimulus measures, promising a “phenomenal” tax plan in a White House meeting with airline executives, although he did not offer specifics other than citing the need to a lower tax burden on businesses.
The dollar index against a basket of major currencies was steady at 100.610 after touching 100.710, its highest in three days.
The index was poised to rise 0.8 percent on the week, although it was still some distance from the 14-year peak of 103.820 scaled early in January.
“Recently, the dollar has been caught between uncertainty towards Bank of Japan policy and U.S.-Japan currency diplomacy on one hand, and hopes for U.S. tax reform on the other. The dollar’s surge was straightforward reaction to developments in the latter,” said Shusuke Yamada, chief Japan FX strategist at BOA Merrill Lynch.
The euro was little changed at $1.0666 after losing 0.4 percent the previous day. The common currency was on track to shed more than 1 percent on the week, during which it was dogged by perceived political risks facing the euro zone.
The dollar extended its overnight rally and rose to a nine-day high of 113.800 yen.
The greenback soared 1.2 percent against the yen the previous day as U.S. Treasury yields rose sharply in the wake of Trump’s comments. Treasury yields had until Thursday declined steadily to multi-week lows, pushing the dollar to a 10-week trough of 111.590 yen.
Market focus turned to the two-day summit between President Trump and Japanese Prime Minister Shinzo Abe starting later on Friday.
Of concern to rejuvenated dollar bulls is the possibility of Trump reiterating his opposition to a strong dollar, and the financial markets are paying particular attention to how much currency policies are discussed at the summit.
Trump and his top trade adviser Peter Navarro criticised Germany, Japan and China last week, saying the trading partners were engaged in devaluing their currencies to the disadvantage of the United States.
“Currency policy may not be a dominant topic at the summit, and that would be positive for the dollar,” Yamada at BOA Merrill Lynch said.
A senior U.S. official said while currency manipulation could come up in the talks, it was not at the top of Trump’s list of topics at the summit.
“The summit may be a quick attempt by Japan to deal with pressure from the United States to allow the yen to appreciate,”
said Makoto Noji, senior strategist at SMBC Nikko Securities.
Elsewhere, the Australian dollar was up 0.4 percent at $0.7653 on upbeat Chinese trade data. The Aussie is often used as a liquid proxy for China-related trades.
The New Zealand dollar edged up 0.2 percent to $0.7199 , stabilising somewhat after sliding 1.1 percent the previous day as the country’s central bank extinguished hopes that a rate hike would happen sooner rather than later. (Editing by Sam Holmes & Shri Navaratnam)