* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh
By Patrick Graham
LONDON Feb 13 The dollar hit a two-week high
against the yen with another round of solid gains on Monday as
investors focused again on the U.S. reflation trade which
dominated the aftermath of Donald Trump's election in November
but has stalled this year.
All eyes are fixed on testimony by Federal Reserve chief
Janet Yellen this week after signs that other policymakers at
the U.S. central bank are leaning towards more hikes in interest
rates than the two currently priced in by markets.
That would help the dollar and reports that Trump did not
even discuss the currency or its strength at weekend talks with
Japanese premier Shinzo Abe did likewise.
The new president drove the greenback to its strongest gain
since mid-December last week by promising a "phenomenal" tax
reform for U.S. companies. Investors hope that signals the focus
of day to day commentary is shifting away from trade
protectionism and security, and towards economic growth.
"Is Trumpflation back with a vengeance? Probably investors
will want to wait but it does seem that all of the cards for
another bull run for the dollar may be falling back into place,"
said Viraj Patel, a strategist with Dutch bank ING in London.
"There can only be upside risk going into Yellen's testimony
The dollar was up 0.4 percent at 113.63 yen in early deals
in London, having reached as high as 114.17 yen in Asian
trading. It was marginally lower against the euro at $1.0654
and around a third of a percent lower at $1.2525 to
Yellen will testify in Congress on Tuesday and Wednesday
after giving markets little new to go on when the bank upgraded
its inflation views earlier this month.
"Trump has just taken a positive approach to tax reforms and
infrastructure spending," said Koji Fukaya, president at FPG
"It remains to be seen if this has any impact on Yellen, as
the Trump administration's lack of policy clarity seemed like a
factor that made the Fed hesitant to raise rates."
China's yuan was also a mover overnight, weakening in the
face of the dollar's strength at the end of last week to hit its
lowest in a month.
The yuan is widely expected to fall further this year and a
further bleed of Beijing's FX reserves last week again has
analysts debating whether a more dramatic weakening is on the
cards at some stage.
It traded 0.2 percent weaker at 6.8771 at 0845 GMT.
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Additional reporting by Shinichi Saoshiro; Editing by Keith