Dollar surges to fresh 7-yr high vs yen

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TOKYO: The dollar hit a fresh seven-year high above 115 yen on Thursday in Asia, following upbeat US jobs data and a Republican sweep in US midterm elections that fuelled hopes for pro-business policies.

In Tokyo midday trading, the greenback rose to 115.24 yen, well up from 114.69 yen in New York Wednesday and at levels last seen in late 2007.

The euro was at $1.2486 against $1.2484 in New York while it also edged up to 143.43 yen from 143.18 yen, ahead of a European Central Bank (ECB) policy meeting later in the day.

“The yen is still facing solid selling pressure since last week’s BoJ decision [to extend its stimulus]and today’s decline is in line with that,” Toshihiko Sakai, a dealer with Mitsubishi UFJ Trust and Banking, told Agence France-Presse.


“Ahead of the ECB [meeting], dollar-buying sentiment has been reinforced, which has also led to the dollar’s relative strength against other currencies, including the yen.

“But the market mood is a weak yen rather than a strong dollar.”

The US private sector added slightly more jobs in October than in September, extending an upward trend, private payroll company ADP said Wednesday.

Markets will be keeping a close eye on Friday’s official US jobs report, which will give the latest snapshot of the economy and an idea about the Federal Reserve’s latest plans for interest rates—a key factor for dollar trading.

The dollar’s latest surge against the yen that started last week was further boosted Wednesday by the Republicans’ election victory, which, raised hopes the gridlock that has paralyzed Washington for years could be broken.

Analysts said the news would also boost the prospects for tax reform, a key oil pipeline and immigration reform. Democratic President Barack Obama said he was “eager to work with the new Congress to make the next two years [of his presidency]as productive as possible.”

Also Wednesday, Bank of Japan governor Haruhiko Kuroda vowed that it would do everything possible to beat years of deflation.

Euro trading was focused on the ECB meeting later Thursday and signs of further policy measures, after the European Commission this week slashed its economic growth forecasts for the eurozone.

“We expect the ECB to strike a dovish tone at today’s meeting, possibly hinting at . . . adjustments or extensions to existing programs,” Credit Agricole said.
But “we remain of the view that the ECB will keep sovereign bonds purchases as a very last resort option,” it added. AFP

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