FOREX-Dollar advances on view Fed to scale back bond buying
(Recasts lead, updates prices, adds quotes)
* Dollar hits four-week high versus yen, takes out 100-yen barrier
* Euro slips, holding just above $1.30
* Australian dollar falls as RBA hints at more rate cuts
NEW YORK, July 2 (Reuters) - The dollar gained across the board on Tuesday on a broad view that the Federal Reserve will scale back its stimulus measures sooner than expected given the recent run of generally solid U.S. economic data. Growing expectations about a reduction in the Fed's quantitative easing program have lifted U.S. bond yields and enhanced the appeal of dollar assets, especially as other major central banks continue to lean toward further monetary easing. Investors on Tuesday also took out reported options barriers at 100 yen, accelerating the dollar's gains. They also pushed the greenback to its highest against the Canadian dollar in 21 months. Analysts said the break of key levels in these currency pairs fueled further broad dollar buying. "Our sense is that the Fed comments and recent economic data are still consistent with the tapering message and that's positive for the dollar," said Vassili Serebriakov, currency strategist at BNP Paribas in New York. Data this week so far showed a rebound in U.S. manufacturing and a rise in factory orders, suggesting the sector was stabilizing. "The dollar has also been supported by the contrast in monetary policy between the Fed and the other major central banks. The U.S. is moving to a less dovish direction, while the other central banks are staying dovish or becoming even more dovish," Serebriakov added. The dollar rose 0.7 percent to 100.40 yen, after hitting a peak of 100.44 yen, its highest since June 3. There's short-term resistance in dollar/yen at the 100.43-yen high. Beyond that, the next resistance does not come in until 102.50 yen, analysts said. The U.S. nonfarm payrolls report is the key focus of the market, with investors expecting creation of 165,000 jobs in June and a lower unemployment rate at 7.5 percent Investors have been gradually buying dollars ahead of Friday's U.S. labor market numbers especially after the Fed lowered its unemployment rate forecasts a few weeks ago. The Fed in its June 19 policy decision lowered its unemployment rate forecast to 6.5 percent in 2014. "A drop in the unemployment rate would confirm that the U.S. economy is moving in the right direction and the Fed is on course to reduce asset purchases in September," said Kathy Lien, managing director at BK Asset Management in New York. The dollar index hit a five-week high of 83.498 and was last at 83.280, up 0.3 percent. The euro fell to $1.3027, down 0.3 percent. Resistance is still at the 200-day moving average at $1.3074, with traders wary before a European Central Bank meeting on Thursday. Analysts expect the ECB to keep interest rates steady and some, such as strategists from HSBC Bank, said the central bank is likely to remain cautious about reacting to recent volatility in financial markets through monetary policy. Some of the recent euro zone data such as the purchasing managers index and consumer confidence were more upbeat than the numbers heading into the June ECB meeting, which could persuade the ECB to hold off on further easing for now. Against the yen, the euro was up 0.5 percent at 130.81 yen . Meanwhile, the Australian dollar fell 0.8 percent to US$0.9162, not far from Monday's three-year low of US$0.9110, after the Reserve Bank of Australia kept the door open to rate cuts, in part due to a still-high currency. The Canadian dollar also stayed on the defensive, with the greenback hitting a 21-month high of C$1.0578. The U.S. dollar was last at C$1.0545, up 0.5 percent.
(Editing by James Dalgleish)