News Column

Dollar hits near 6-yr high vs. yen before U.S. jobs data

September 5, 2014

Ryotaro Nakamaru

The U.S. dollar hit its highest level in nearly six years against the yen on Friday in Tokyo on growing optimism that a U.S. Labor Department report due later in the day will confirm strength in the world's largest economy.

At 5 p.m., the dollar fetched 105.24-26 yen compared with 105.21-31 yen in New York and 104.94-95 yen in Tokyo at 5 p.m. Thursday, after briefly rising to 105.71 yen, a level last seen in October 2008. Its lowest quote for the day was 105.23 yen, changing hands most frequently at 105.56 yen.

The euro was quoted at $1.2937-2938 and 136.15-19 yen against $1.2940-2950 and 136.20-30 yen in New York and $1.3142-3143 and 137.92-96 yen in Tokyo late Thursday afternoon.

The dollar hit the peak against the yen on Friday morning, retaining momentum from overnight in New York, where data on the U.S. service sector in August and a private jobs report supported the upbeat outlook and fed expectations of rises in U.S. long-term interest rates.

"Economic indicators coming from the United States in the third quarter have all been very strong," said Toru Moritani, chief market economist at Sumitomo Mitsui Banking Corp. "Currency traders are expecting the dollar's uptrend against the yen to continue."

The dollar later slipped as some market players locked in gains ahead of the upcoming jobs report.

"If the numbers are strong we could see the dollar rise back to the higher end of 105 yen, maybe even test the 106 yen line," said Yuzo Sakai, manager of foreign exchange business promotion at Tokyo Forex & Ueda Harlow.

The result of the report will be closely scrutinized as the U.S. Federal Reserve weighs the timing of a hike in its benchmark short-term interest rate, currently near zero. Fed chief Janet Yellen has said the hike could come sooner if labor market conditions improve past expectations.

The euro traded near a 14-month low marked overnight against the dollar after the European Central Bank said it was taking its main interest rates to new record lows after rate cuts in June.

The ECB reduced its benchmark rate by 0.1 percentage point to 0.05 percent and its deposit rate by 0.1 point to minus 0.20 percent, and also announced programs to purchase asset-backed securities and covered bonds from October to encourage lending to shore up the flagging eurozone economy.

ECB President Mario Draghi said the decision at Thursday's policy meeting was not unanimous and that quantitative easing, Fed-style outright purchases of government bonds, was also discussed by policymakers as a possible measure.

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Source: Japan Economic Newswire

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