Dollar hits 2-week high versus yen on US-Japan summit relief
TOKYO: The dollar rose to a two-week high versus the yen yesterday, with the market breathing a sigh of relief as the closely watched two- day US- Japan summit held over the weekend was seen to have ended smoothly.
US President Donald Trump and Japanese Prime Minister Shinzo Abe appeared to have established a quick friendship through a hug, a prolonged handshake and rounds of golf, allaying investor fears of the meeting ending acrimoniously with Trump talking tough on trade, currency and security issues.
The dollar index against a basket of major currencies was up 0.15 per cent at 100.930, close to a near two-week high of 101.010 reached on Friday when pledges of ‘ phenomenal’ tax reforms by Trump had boosted the greenback.
The dollar was up 0.65 per cent at 113.920 yen, briefly touching 114.170, the highest since Jan 30.
“There is relief that the summit ended without confrontation, and that the joint statement did not directly touch upon currency issues,” said Masafumi Yamamoto, chief forex strategist at Mizuho Securities.
There was concern prior to the summit that Trump would reiterate accusations that Japan was one of several countries devaluing their currencies to the disadvantage of the United States.
“While the outcome of the US- Japan summit itself is not a huge dollar boosting factor, the currency continues to receive firm support from expectations towards Trump’s ‘phenomenal’ tax plans,” Yamamoto said.
Trump said his administration wou ld be an nou nc i ng “something phenomenal in terms of tax” over “the next two or three weeks” during a meeting with airline executives on Thursday.
The president’s comments increased risk appetite, sending Wall Street shares to record highs on Friday, in turn lifting US Treasury yields from multi-week lows to the dollar’s advantage.
The market’s near-term focus was on Federal Reserve Chair Janet Yellen’s congressional testimony scheduled for Tuesday and Wednesday.
Investors are keen to gauge Yellen’s policy stance after the central bank upgraded its inf lation views earlier this month. — Reuters