US dollar hits more than 12-year peak against Japan’s yen
The U.S. dollar hit a more than 12-year high against the yen on Tuesday as upbeat U.S. data reignited talk of an interest rate hike this year.
In Tokyo, the dollar briefly hit 125.05 yen — its strongest level since December 2002 — before settling back to 124.59 yen, compared with 124.81 yen in New York.
The chances of a U.S. rate hike — which tends to boost demand for dollar-denominated assets — have increased following positive economic data and comments from Federal Reserve chief Janet Yellen that rates would go up “at some point this year.”
As the Fed tightens policy, speculation is building that the Bank of Japan will announce further stimulus to prop up the weak economy, which would tend to soften the yen.
On Monday, data showing that U.S. construction spending picked up strongly in April increased belief the economy is rebounding after the winter stall, which saw it contract in the first three months of the year.
Also, the Institute for Supply Management said its measure of U. S. manufacturing activity climbed last month from a near two-year low in April, while the Commerce Department said personal incomes rose 0.4 percent in April, and disposable income the same, after both were flat in March.
In other trading, the euro fetched US$1.0930 and 136.20 yen, mixed from 1.0924 and 136.35 yen in New York, as investors look for progress in Greece’s attempts to strike a bailout deal in order to unlock billions of euros in aid that will allow it to service its debts.
The dollar strengthened against other Asia-Pacific currencies.
It firmed to 63.74 Indian rupees from 63.63 rupees Monday, to 13,236.00 Indonesian rupiah from 13,208.00 rupiah, to 33.78 Thai baht from 33.66 baht, and to 44.65 Philippine pesos from 44.53 pesos.
The greenback also rose to 1,114.41 South Korean won from 1,109.14 won, to SG$1.3552 from SG$1.3494.
The Australian dollar slipped to 76.32 U.S. cents from 76.60 cents while the Chinese yuan bought 20.11 yen, against 20.01 yen.