* Yen steadies as investors bet Abenomics survives
* China services growth drives yuan to 14-month top
* Dollar under pressure in choppy trade
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, Aug 31 (Reuters) - The dollar was poised to
register a fourth straight monthly drop on Monday as investors
bet on U.S. rates staying low for longer, while the yen steadied
on the view that Japan's next leader will stay the course on the
'Abenomics' economic revival programme.
Chief Cabinet Secretary Yoshihide Suga, a long-time
lieutenant of Shinzo Abe is in a favourable position, Japanese
media reported, as he is expected to get the backing of
important factions within his ruling party. The yen JPY=EBS eased by about 0.3% in Asia to 105.62 per
dollar, having climbed as far as 104.195 on Friday in the wake
of Abe's resignation as prime minister for health reasons. Yen
crosses also reeled in some of Friday's leap. WX=
Elsewhere trade was choppy as the boost to Asian currencies
from a solid expansion in China's service sector had begun to
fade a bit. Nevertheless, the Australian dollar AUD=D3 touched a
21-month peak of $0.7381 and remains set to post a fifth
straight monthly rise, its best streak in over a decade and a
34% gain from March's trough.
The New Zealand dollar NZD=D3 made a post-COVID high of
$0.6749. China's yuan hit a 14-month peak of 6.844 to the dollar
in offshore trade CNH= as investors cheer the services growth
rather than fretting about a stalled rebound in manufacturing.
"The pick-up in service sector pointed to a catch-up in the
reviving consumption," said Mizuho's chief Asian FX strategist,
Ken Cheung in Hong Kong. "Overall, the China growth recovery in
Q3 appears to turn more balanced," he said.
The euro EUR=EBS was steady at $1.1903 and sterling GBP=
last sat at $1.3342.
Attention now turns to a handful of Federal Reserve
officials due to speak through the week, beginning with Richard
Clarida at 1300 GMT Monday, as they put more flesh on the bank's
new policy framework.
LOWER FOR LONGER
A speech last Thursday in which Federal Reserve Chair Jerome
Powell outlined an accommodative shift in the central bank's
approach to inflation has weighed on the greenback as investors
interpreted it as meaning rates would stay lower for longer.
Against a basket of currencies =USD the dollar drifted
higher to 92.310 in Asia but is down 1.2% for the month. If
sustained that would be its worst August in five years and make
for the longest run of monthly losses since the summer of 2017.
"It seems clear to us that we are at the start of a
multi-year period of dollar decline, from very elevated levels,"
said Societe Generale strategists Kit Juckes and Olivier Korber.
Others expect that may eventually over-ride any uncertainty
in Japan.
"Questions over Abenomics in conjunction with the broader
dollar move leaves dollar/yen vulnerable to the downside over
the short-term," analysts at 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 which we do not
expect to be significant."
Former Japanese Defence Minister Shigeru Ishiba, seen as the
biggest risk to policy continuity in Japan, is favoured in
public opinion polls but lacks party support which appears to be
behind Suga, according to Japanese media reports. Jiji news agency reported that Japan's ruling Liberal
Democratic Party will select its next leader on Sept. 14.
On the radar later in the week is an Australian central bank
meeting on Tuesday, where analysts expect no policy changes but
say an upbeat tone could boost the Aussie because the Fed's
message has been so dovish.
Eurozone inflation data prints on Tuesday and U.S. payrolls
data is due on Friday.