Dollar Remains Higher Against Yen Before U.S. Manufacturing Data

By Masaki Kondo and Kristine Aquino

     Aug. 28 (Bloomberg) -- The dollar remained higher following a two-day advance against the yen before U.S. reports that economists say will point to improvement in consumer sentiment and regional manufacturing.

     The greenback also maintained a gain versus the euro before Federal Reserve Chairman Ben S. Bernanke delivers a speech on Aug. 31 at the Kansas City Fed's annual economic symposium in Jackson Hole, Wyoming. Demand for the euro was limited ahead of German data forecast to show consumer sentiment will fall for the first time in three months.

     "The market may be open for disappointment" at Jackson Hole, said Derek Mumford, a director in Sydney at Rochford Capital, a currency risk-management company. "Assuming there won't be significant quantitative easing, then the U.S. dollar could have quite a strong performance in the
next couple of months."

     The dollar traded at 78.77 as of 7:54 a.m. in Tokyo after rising 0.3 percent in the past two sessions to 78.74 yesterday. It was little changed at $1.2504 per euro after a 0.1 percent gain in New York. The common currency traded at 98.47 yen after losing 0.2 percent since Aug. 23 to 98.43.

     The Fed Bank of Richmond is forecast to say today that its factory index for the region advanced to minus 10 this month from minus 17 in July, according to the median estimate of economists surveyed by Bloomberg News. A reading of less than zero signals contraction.

                      Confidence Improving

     A gauge of U.S. consumer confidence probably rose to 66 in August, the highest since April, from 65.9 last month, a separate poll of economists shows. The Conference Board is scheduled to release the data today.

     Bernanke probably won't use his Aug. 31 speech in Jackson Hole to suggest a third round of bond buying is at hand, according to economists including Michael Feroli at JPMorgan Chase & Co. in New York and James O'Sullivan at Valhalla, New York-based High Frequency Economics. Fed policy makers, who meet next on Sept. 12-13, are closely monitoring unemployment and other data and have been divided about whether to spur expansion.

     GfK's index of German consumer sentiment is likely to decline to 5.8 in September from 5.9 this month, according to economist projections taken before the market research company reports the figure today.