LONDON: The dollar hit a four-week high against the yen on Tuesday on the prospect of US jobs data later this week fuelling expectations of the Federal Reserve scaling back stimulus.
But it stayed stuck below reported options barriers at the 100 yen level, with many investors sidelined before a US public holiday on Thursday and Friday's monthly payrolls report.
The dollar rose 0.2 percent to 99.91 yen, its highest since June 5, with traders reporting offers just ahead of 100 yen. It was helped by data on Monday showing a rebound in US manufacturing activity.
Strong jobs data would boost the dollar by fanning speculation about an early paring back of the Fed's $85-billion-a-month bond buying.
"The US ISM data was a tad better than expected, so that supports expectations of a tapering of QE, but it wasn't strong enough to bring those expectations very much forward," said Niels Christensen, currency strategist at Nordea in Copenhagen.
He saw the dollar breaking above 100 yen this week. Dollar/yen has lately moved in tandem with Japanese stocks, which rose on Tuesday.
The euro was steady at $1.3052, off last week's trough of $1.29845, its lowest since early June. It was supported by euro zone manufacturing surveys on Monday showing improvement by the region's periphery.
But the euro held below resistance at the 200-day moving average at $1.3075, with traders wary before a European Central Bank meeting on Thursday at which President Mario Draghi could stress the euro zone still needs stimulus.
The euro rose to a three-week high of 130.63 yen.
RBA KNOCKS AUSSIE
The Australian dollar fell 0.6 percent to $0.9182, just above Monday's three-year low of $0.9110, after the Reserve Bank of Australia kept the door open to rate cuts, in part due to a still-high currency.
The dollar was steady against a basket of currencies, with the dollar index at 83.003, near a four-week peak, with support seen at 82.915, the bottom of the daily Ichimoku cloud.
"Expectations on the Fed's policy will probably go back and forth, depending on upcoming economic numbers. Still, it seems reasonable to think US bond yields are gradually rising, which should underpin the dollar," said a trader at a Japanese bank.
