* Mnuchin reiterates support for ultra long-term bond
* As dollar/yen rises, euro holds ground before May 7 French
* Aussie awaits RBA policy decision and statements for cues
By Shinichi Saoshiro
TOKYO, May 2 The dollar hit a one-month high
against the yen on Tuesday, lifted by Treasury yields which
surged after U.S. Treasury Secretary Steven Mnuchin commented on
the possibility of ultra long-term bond issuance.
The greenback last traded at 111.800 yen after
touching 111.945, its highest since March 31.
The dollar was boosted as long-term Treasury yields soared
to multi-week highs after Mnuchin reiterated his view in an
interview with Bloomberg, saying the government issuing debt
exceeding 30-years in maturity "can absolutely make sense."
"The dollar is moving in tandem with Treasury yields, which
saw its benchmark rise above the 2.3 percent threshold with
Mnuchin seemingly very enthusiastic about issuing so-called
ultra long-term bonds," said Yukio Ishizaki, senior currency
strategist at Daiwa Securities.
The jump in U.S. debt yields helped the dollar brush off
negative pressure from downbeat data.
Reports on Monday showed U.S. factory activity slowed in
April, while consumer spending was unchanged in March, and an
important inflation measure fell on a monthly basis for the
first time since 2001.
The euro, on the other hand, held its ground against the
dollar. The common currency was up 0.1 percent at $1.0909
, adding to modest gains made overnight.
It was in reach of a 5-1/2-month high of $1.0951 scaled last
week on relief after Emmanuel Macron's victory against anti-euro
nationalist Marine Le Pen in the first round of France's
presidential elections. The runoff vote is on May 7.
"The euro was initially expected to become volatile as the
May 7 French vote neared, but it is still holding very firm.
With French equities also at record highs, it appears that the
market is treating Macron's win as a foregone conclusion,"
Ishizaki at Daiwa Securities said.
The euro traded at 122.00 yen after touching a
1-1/2-month high of 122.150.
The Australian dollar was a shade higher at $0.7532
, drawing support from a bounce in iron ore prices.
Of key importance for the Aussie was the Reserve Bank of
Australia's policy decision later in the day. While the central
bank is widely expected to stand pat on interest rates,
investors were keen to know whether it would recognise recently
upbeat domestic economic data.
The U.S. dollar index against a basket of major
currencies was effectively flat at 99.073 after posting a small
(Reporting by Shinichi Saoshiro; Editing by Eric Meijer)