* The yen stabilizes when investors rate Abenomics survives
* China’s growth in services pushes the yuan to a peak of 14 months
* Dollars under pressure in troubled trade
* Graphics: World exchange rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, August 31 (Reuters) – The dollar was ready to record a fourth straight monthly fall on Monday as investors bet US interest rates remain low for longer while the yen was stable with the view that Japan’s next leader will remain the course of the ‘Abenomics’ financial resuscitation program.
Cabinet Secretary Yoshihide Suga, a longtime lieutenant for Shinzo Abe, is in a favorite position, Japanese media reported, as he is expected to gain support for key factions in his ruling party.
The yen eased by approx. 0.3% in Asia to 105.62 per. Dollars after climbing up to 104,195 on Friday in the wake of Abe’s resignation as prime minister for health reasons. Yen crosses are also crossed in some of Friday’s jumps.
Elsewhere, trade was slashed as the boost to Asian currencies from a solid expansion in China’s service sector had begun to fade slightly.
Nevertheless, the Australian dollar touched a 21-month high of $ 0.7381 and remains set to place a fifth straight monthly rise, its best line in over a decade and a gain of 34% from the March trough.
The New Zealand dollar hit a post-COVID high of $ 0.6749. China’s yuan hit a 14-month high of $ 6,844 in offshore trading as investors cheered on service developments rather than slipping around a halted manufacturing rebound.
“The uptick in the service sector pointed to a catch-up in reviving consumption,” said Mizuho’s top Asian FX strategist, Ken Cheung in Hong Kong. “Overall, growth in China in the third quarter appears to be more balanced,” he said.
The euro was constant at $ 1.1903, and sterling last sat at $ 1.3342.
Attention is now turning to a handful of Federal Reserve officials who will be speaking through the week beginning with Richard Clarida at 6 p.m. 1300 GMT on Monday as they put more meat on the bank’s new policy framework.
DOWN IN LONGER
A speech last Thursday in which Federal Reserve Chairman Jerome Powell outlined a welcoming shift in the central bank’s approach to inflation has weighed on the greenback, as investors interpreted it as meaning that rates would remain lower for longer.
Against a basket of currencies, the dollar drifted higher to 92,310 in Asia, but is down 1.2% for the month. If maintained, it would be the worst August in five years and make the longest run with monthly losses since the summer of 2017.
“It seems clear that we are at the beginning of a multi-year period of dollar fall, from very elevated levels,” said Societe Generale strategists Kit Juckes and Olivier Korber.
Others expect that it may eventually overcome any uncertainty in Japan.
“Issues of abenomics associated with the broader dollar movement leave the dollar / yen vulnerable to the downside in the short term,” analysts at the MUFG wrote in a note.
“However, it is the broader dollar-bearish view that will be most important … not a shift in policy in Japan that we do not expect to be significant.”
Former Japanese Defense Minister Shigeru Ishiba, considered the biggest risk to political continuity in Japan, is preferred in opinion polls but lacks party support, which appears to be behind Suga, according to Japanese media reports.
News agency Jiji reported that Japan’s ruling Liberal Democratic Party will elect its next leader in September. 14.
On the radar later this week is an Australian central bank meeting on Tuesday, where analysts do not expect any changes in policy, but say an optimistic tone may boost Aussie because the Fed’s announcement has been so informal.
Information on euro area inflation is printed on Tuesday, and US wage data is due on Friday. (Reporting by Tom Westbrook Editing Shri Navaratnam)