TOKYO: The dollar extended its gains on Tuesday as investors bet on the Federal Reserve lifting interest rates before the end of the year.
Traders have been shifting back into the greenback since Fed boss Janet Yellen on Friday said the US economy was improving and indicated it could be strong enough to withstand tighter borrowing costs.
While she did not give a timeframe in her speech at the annual Jackson Hole symposium of central bankers, Yellen provided a clear signal that a 2016 move was still on the table.
Data on Monday showed US consumer spending rose again in July, the latest positive indicator on the world’s top economy. Attention now turns to the release of jobs creation figures Friday, with a strong reading expected to further bolster the case for a move by the Fed.
On Tuesday, the greenback bought 102.11 yen, up from 101.88 yen Monday in New York, while the euro fell to $1.1172 from $1.1187.
The US unit also rose against the Thai baht, Singapore dollar, Philippine peso, the Indonesian rupiah and Malaysia’s ringgit. But it slipped 0.5 percent against the South Korean won.
The euro climbed to 114.11 yen from 113.98 yen, as weak Japanese data fanned speculation of more monetary easing measures from the Bank of Japan.
“Without question, jobs day is always a monthly highlight, but given the scope for massive short-term volatility, hyperbole is in high gear with everyone discussing Friday’s non-farm payroll,” said Stephen Innes, a senior trader at forex firm OANDA.
“Given the Federal Reserve board’s tilt at Jackson Hole, it plainly appears it will take a big surprise to derail a 2016 Fed hike expectation at this point.”