Dollar buoyant after upbeat data, hits nine-month high vs yen

The dollar was in fine fettle against its peers on Friday, advancing to a ninemonth high versus the yen, after data reinforced upbeat views about the US economy and backed the Federal Reserve’s signal for a steady course of rate increases over the next year.

US gross domestic product grew at a 4.2 percent clip in the second quarter, the fastest in nearly four years, according to US government data on Thursday. Another report showed durable goods rose 4.5 percent in August, rebounding from a revised 1.2 percent drop the month before.

The dollar traded at 113.50 yen af- ter gaining roughly 0.6 percent overnight to 113.64, its highest since December 2017.

The decline in US Treasury yields slowed in the wake of the upbeat data, underpinning the dollar. Yields had declined sharply after the Federal Reserve tightened monetary policy on Wednesday and stuck to its intention of hiking interest rates at a steady pace.

“The broad rally by the dollar has also been helped by seasonal factors, as it has coincided with US investors bringing funds back home for the month’s end,” said Yukio Ishizuki, senior forex strategist at Daiwa Securities in Tokyo. “The dollar looks well placed to gain particularly against the yen, with the US-Japan summit over for now and with interest rate differentials between the two countries continuing to widen,” said Ishizuki.

US President Donald Trump and Japanese Prime Minister Shinzo Abe agreed on Wednesday to start trade talks in an arrangement that, for now, protects Japanese automakers from punitive tariffs, seen as a major threat to the export-dependent economy.