By Rae Wee SINGAPORE, Feb 2 (Reuters) - The dollar clung to its gains on Monday while collapsing prices of precious metals rattled financial markets, with investors weighing what a Federal Reserve under Kevin Warsh might look like. Moves in currencies were fairly insulated from a broader market rout triggered by a plunge in gold and silver which spilled over into equity markets, as investors were left selling positions in profitable trades to meet margin calls. The yen was also back on traders' radars, after Japanese Prime Minister Sanae Takaichi over the weekend talked up the benefits of a weaker yen in a campaign speech, in a tone at odds with her finance ministry which has worked to stem the currency's declines. The dollar held steady in Asia after a rally on Friday sparked by U.S. President Donald Trump's pick of Warsh as the next Fed chair. Analysts assumed Warsh was less likely to press for all-out rapid rate cuts than some other candidates who had been in the running, though he has sounded more dovish than current chair Jerome Powell. Against a basket of currencies, the dollar was last at 97.21, holding to Friday's 1% gain. The euro was comfortably away from the $1.20 level as it last stood at $1.1848, while sterling fell 0.16% to $1.3664. Richard Clarida, PIMCO's global economic adviser and a former Fed vice chair, said while Warsh will inherit a Federal Open Market Committee that remains divided over the pace and scale of further policy easing, he believes Warsh will be able to deliver two rate cuts this year, and potentially even a third. "Beyond those next two or three rate cuts, we believe Warsh may be more wary, depending on the inflation outlook," said Clarida. "Warsh, based on his writings since leaving the Fed, may be much less likely to rely on extensive forward guidance about the future path of interest rates." Market pricing remains at two Fed cuts for this year, with a move seen unlikely until June, when Warsh would be chair if confirmed by the Senate. YEN WEAKENS The Japanese yen was a touch weaker at 154.82 per dollar on Monday, pressured in part by the dollar's strength and Takaichi's weekend comments that seemed to condone a weaker currency and expectations her party is likely to score a landslide victory in the upcoming lower house election. A survey by the Asahi newspaper showed the Liberal Democratic Party (LDP) is likely to well exceed a majority of 233 seats out of 465 seats up for grabs in the lower house. Together with LDP's coalition partner, the Japan Innovation Party or Ishin, the ruling alliance will likely reach 300 seats, the poll showed. Analysts at Societe Generale said that while the forecast sounds "excessively" favourable, such a win would mean "a lot" for Takaichi if achieved. "This will enable Takaichi to freely pursue her expansionary policy," they said, adding that the initial market reaction would be to price in a greater risk premium on longer-dated Japanese government bonds and the yen. Investors have sold the yen and Japanese government bonds in the run-up to the election, on expectations of more expansionary fiscal policy should Takaichi win a strong mandate and that the tax cuts her party has touted would further strain already stretched government finances. Still, the ailing yen has found a floor in recent times, as traders remain on alert to the prospect of a coordinated currency intervention by the U.S. and Japan after talks of rate checks from both sides late last month sent the currency surging. Elsewhere, the Australian dollar fell 0.67% to $0.6916, as it struggled from the broad risk-off mood in markets. The Reserve Bank of Australia sets rates on Tuesday, with expectations it will deliver a hike. The New Zealand dollar fell 0.37% to $0.5997. (Reporting by Rae Wee; Editing by Diane Craft, Sonali Paul and Lincoln Feast.) (The article has been published through a syndicated feed. Except for the headline, the content has been published verbatim. Liability lies with original publisher.)
