* Dollar/yen briefly tops 114.00 to highest since July
* Fed chair decision in focus
* Dollar already bullish after progress on US tax reforms
* ECB policy meeting eyed
* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh
By Jemima Kelly and Polina Ivanova
LONDON, Oct 23 (Reuters) - The dollar touched a three-month
high against the yen on Monday, as investors bet an emphatic
election victory for Japan's ruling party would see a
continuation of "Abenomics", the ultra-loose policies that have
kept downward pressure on the yen.
The greenback was trading around its highest in 2-1/2 weeks
against a basket of six major currencies, as markets
speculated that the next chair of the U.S. Federal Reserve would
take a more hawkish stance on monetary policy.
U.S. President Donald Trump said in comments aired on Monday
that he would make his choice on the Fed chair "very shortly"
and was still weighing at least three people: Federal Reserve
Governor Jerome Powell, Stanford University economist John
Taylor and current Fed Chair Janet Yellen.
Japanese Prime Minister Shinzo Abe's ruling bloc scored a
big win in Sunday's election, with his Liberal Democratic Party
(LDP)-led coalition winning a combined 313 seats, keeping its
two-thirds "super majority" in the lower house.
"The politics of Abenomics will go on ... (and) additional
spending can only be supported by an extension of monetary
policy," said Esther Reichelt, currency strategist at
Commerzbank in Frankfurt.
But the major driver of the dollar against the yen in the
near future is likely to be the Fed chair decision, she added.
Abe's victory eased fears that the economic steps
implemented under his leadership, including an expansive
asset-purchase programme by the Bank of Japan, would be
disrupted and would halt the yen's depreciation against the
The dollar gained as much as half a percent to reach 114.10
yen after the results, its strongest since July 11. It
came off those highs in London trade but was still up 0.3
percent on the day at 113.89 yen.
"The relatively muted rise in dollar/yen following Abe's
election win is consistent with the fact that this was very much
the most expected result," said BNP Paribas currency strategist
Some analysts said Abe's emphatic win increased the chances
that BOJ Governor Haruhiko Kuroda, who is widely considered a
policy dove, would be reappointed when his term ends.
The greenback had already climbed broadly on Friday, after
the U.S. Senate approved a budget blueprint for the 2018 fiscal
year, clearing a critical hurdle for Republicans to pursue a
tax-cut package without Democratic support.
It added to those gains on Monday, climbing 0.4 percent
against the euro, which was trading at $1.1742.
The common currency has drifted down from a 2-1/2-year peak
of $1.2092 scaled on Sept. 8, as hopes for the European Central
Bank to take a more hawkish stance have been tempered by
speculation that it is not be in a hurry to tighten policy.
The ECB holds a policy meeting on Thursday.
(Reporting by Jemima Kelly and Polina Ivanova; Additional
reporting by Shinichi Saoshiro in Tokyo; Editing by Catherine
First Published: 2017-10-23 02:18:00
Updated 2017-10-23 13:43:10
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