* Rising US yields pushes dollar/yen to near 2-month high
* Moody's cut of Greece ratings weighs on euro earlier
* U.S. economy expands 2.2 pct in Q3, weaker than expected
(Updates prices, adds comment, changes byline, changes
dateline, previous LONDON)
By Wanfeng Zhou
NEW YORK, Dec 22 (Reuters) - The dollar was stronger
against the yen on Tuesday, sticking close to a near two-month
high hit earlier as U.S. bond yields rose on expectations for
U.S. economic growth.
The greenback, however, trimmed gains versus the yen and
slipped against the euro after a sharper-than-expected downward
revision to U.S. third quarter gross domestic product offset
news of a cut of Greece debt ratings.
Solid figures on the U.S. job market and retail sales
earlier this month helped push U.S. Treasury yields higher and
had further widened the spread between short-term U.S. and
Japanese government bond yields, providing an impetus for
traders to bid up the dollar against the yen.
Meanwhile in Japan, Bank of Japan Governor Masaaki
Shirakawa said on Monday the bank will maintain its current
"effective zero interest rates" and is ready to act promptly
fight deflation.
"There's some focus yesterday on the potential for the use
of quantitative easing in Japan in order to fight deflation and
that pushed dollar/yen higher. Technically we already started
to move higher and that just added fuel to the fire," said
Camilla Sutton, senior currency strategist at Scotia Capital in
Toronto.
In early trading, the dollar was up 0.3 percent at 91.41
yen <JPY=> after touching 91.64 yen, according to Reuters data,
its strongest since late October.
The euro last traded up 0.2 percent on the day at $1.4307
<EUR=>. It earlier came under pressure after U.S. ratings firm
Moody's cut Greece's rating by one notch to A2 from A1, which
was Greece's third downgrade by a major agency this month.
[]
Concerns about the problems surrounding peripheral euro
zone countries had weighed on the euro, and particularly
Greece, whose sovereign debt rating already had been
downgraded by Fitch Ratings and Standard & Poor's.
"The move was not a surprise given what Fitch and S&P had
done. The next crucial step is for Greece to outline credible
steps to deal with its deficit," said Lee Hardman, currency
economist at Bank of Tokyo-Mitsubishi UFJ.
"This will continue to be a big structural negative for the
euro that will remain in place over the medium term," he said.
The U.S. economy grew at a much slower pace than initially
thought in the third quarter. The Commerce Department's final
estimate showed the economy grew at a 2.2 percent annual rate
instead of the 2.8 percent pace it reported last month.
Analysts polled by Reuters had forecast the report to show GDP
unrevised at a 2.8 percent. See []
Later in the session, investors will review data on U.S.
existing home sales for November at 10 am (1500 GMT).
(Additional reporting by Tamawa Desai in London; Editing by
Chizu Nomiyama )
