* U.S. dollar hits highest in more than five weeks * Japan’s yen falls versus dollar, euro LONDON, Sept 28 (Reuters) - The U.S. dollar rose to its highest in more than five weeks and the Japanese yen dropped versus both dollar and euro, as rising U.S. and European government bond yields made their currencies more attractive to Japanese buyers. U.S. Treasury yields have surged since the end of last week, after the Federal Reserve said it will likely begin reducing its monthly bond purchases as soon as November and hinted that interest rate hikes may follow more. The Japanese yen is the G10 currency most correlated with U.S. two-year and 10-year Treasury yields, MUFG currency analyst Lee Hardman said in a note to clients. “Upward pressure on US yields should continue to provide a lift for USD/JPY in the near-term,” he said, although he also said that the yen is “deeply undervalued” which could limit the extent of the weakness. At 0722 GMT, the U.S. dollar index was up 0.2% at 93.592, having earlier hit 93.616, its highest since August 20. The euro was down 0.2% versus the dollar at $1.16775 . “Amidst the many cross-currents in FX markets right now - energy, Evergrande, US debt ceiling, Delta - one theme that seems to be gaining traction is that the market lies on the cusp of re-assessing the path for the Fed tightening cycle,” ING strategists wrote in a note to clients. “A big move higher in the short-end is the key reason why we are bullish on the dollar, particularly from 2Q next year, but we will closely monitor and re-assess whether that move needs to come earlier - largely a function of timing the take-off in short-end rates.” The yen - which is seen as a safe haven currency - was down around 0.3% against the dollar, with the pair changing hands at 111.355. Earlier in the session it hit 111.430, the yen’s weakest in almost three months. ING strategists said the yen’s weakness was also due to Japan’s role as a large energy importer. Oil prices climbed for a sixth day on Tuesday and prices of liquefied natural gas (LNG) and coal also rose. Minutes from the Bank of Japan’s July meeting showed that some central bank policymakers warned of the risk of a delay in the country’s economic recovery. The Australian dollar, which is seen as a liquid proxy for risk appetite, was down 0.2% at $0.7267. The British pound was down 0.2% at $1.36785. The currency jumped last week after a hawkish tone by the Bank of England, but analysts struck a cautious note on the currency as Britain struggled with supply chain chaos. “The longer the supply bottlenecks persist, the more endangered the economic recovery will be and the less likely a significant tightening of monetary policy will become,” Commerzbank FX analyst Esther Reichelt said in a client note. Currency traders are waiting for central bank speakers, including ECB Christine Lagarde at 1200 GMT and U.S. Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen, who will appear before U.S. lawmakers later in the session. Market participants are also watching U.S. politics, after the Senate failed to advance a measure to suspend the federal debt ceiling and avoid a partial government shutdown. China’s central bank said it would protect consumers exposed to the housing market on Monday and injected more cash into the banking system as the Shenzhen government began investigating the wealth management unit of ailing developer Evergrande. Reporting by Elizabeth Howcroft; editing by Philippa Fletcher