FOREX-Dollar catches breath after rise on U.S. data, Fed remarks

* DXY index rises to one-month high, within sight of 11-year high

* U.S. Jan CPI, durables goods data raise rate-hike bets

* Fed’s Bullard, Williams keep alive hopes of higher rates

By Lisa Twaronite

TOKYO, Feb 27 (Reuters) – The dollar took a breather in Tokyo on Friday after surging to a one-month high against a basket of currencies overnight as U.S. economic data and comments from Federal Reserve officials prompted investors to raise their bets on a rate increase.

The dollar was slightly lower on the day against the yen at 119.29 yen, after rising as high as 119.51 on Thursday, when the dollar index climbed to one-month high of 95.357. That brought the index close to its more than 11-year high of 95.481 hit on Jan. 23.

The euro edged up about 0.1 percent in Asian trade to $ 1.1197, but remained not far from a one-month low of $ 1.1184 touched overnight.

The U.S. core consumer price index, which excludes food and energy costs, rose 0.2 percent in January, more than the 0.1 percent increase economists had expected, even as overall CPI fell 0.7 percent because of falling oil prices.

U.S. durable goods orders also rose 2.8 percent in January, though the upbeat readings were tempered by a bigger-than-expected rise in new filings for unemployment benefits.

“After the data, people are more comfortable about expecting a U.S. interest rate hike, and taking on long dollar positions,” said Kaneo Ogino, director at Global-info Co in Tokyo, a foreign exchange research firm.

“The dollar’s downside should be limited, as I think many people will use falls as a chance to buy on dips,” he said.

San Francisco Fed President John Williams and St. Louis Fed chief James Bullard both suggested that the U.S. central bank might end its near zero interest rate policy sooner than some traders expect.

That offset some of the doubts raised by Fed Chair Janet Yellen in her semi-annual testimony before Congress on Tuesday and Wednesday that an increase could come as early as June.

Divergent monetary policy expectations have bolstered the greenback against the yen, with Bank of Japan widely expected to keep its ultra-easy policy until it meets its goal of sustainable 2 percent inflation.

Japanese data published early on Friday showed core consumer prices rose 2.2 percent in January from a year earlier, slightly less than economists’ median estimate for a 2.3 percent annual gain.

Other data showed a larger-then-expected jump in industrial production, but also a rise in the unemployment rate last month, showing the economic recovery continues but not without areas of concern.