The US dollar rose for a seventh day against the yen, the longest winning streak since October last year, before US economic data this week that might add to speculation the economy is strong enough to handle higher interest rates.
A gauge of the US dollar jumped 1.3 percent last week after some US Federal Reserve officials said they would consider raising rates at a meeting next month. The yen weakened versus all of its 16 major peers yesterday as gains in Japanese shares and US stock futures reduced demand for haven assets.
“Expectations for solid US economic data this week are lifting the [US] dollar,” FPG Securities Co chief executive officer Koji Fukaya said. “It’s hard to find a reason to sell [US] dollars. Concerns over the US economy, China, oil, which had fueled risk aversion, are subsiding to underpin the [US] dollar and weigh on the yen.”
The US dollar appreciated 0.4 percent to ￥113.55 as of 7:51am in London yesterday, extending its advance in the past seven days to 1.9 percent. The US currency was little changed at US$1.1163 per euro. The yen dropped 0.4 percent to ￥126.76 per euro.
Financial markets including those of the UK, Germany, Australia and New Zealand were shut yesterday for the Easter holiday. Trading took place as normal in the US.
INTEREST RATES
US employers added 208,000 workers this month, after hiring 242,000 the previous month, according to a Bloomberg survey before the US Labor Department releases the figure on April 1. Data to be released yesterday include personal income and spending and the US Fed’s favored inflation gauge.
“The [US] dollar will be highly sensitive to US data this week ahead of payrolls,” Takeru Kurokawa, an analyst in Tokyo at Ueda Harlow Ltd, which provides margin-trading services, wrote in a note to clients. “The [US] dollar is prone to react more to positive US economic news.”
Speculators and hedge funds trimmed bets for a third week that the US currency would strengthen against eight of its major peers, according to data from the US Commodity Futures Trading Commission.
US policymakers should consider raising rates next month, the Federal Bank of St Louis President James Bullard said on Wednesday last week.
Federal Bank of Philadelphia President Patrick Harker said last week the US economy is resilient and he would support a quarter-point increase if that continues.
“It’s all about Fed expectations,” Prestige Economics LLC president and chief economist Jason Schenker said in an interview on Bloomberg Television. “The fact that they did not move in March, but now it looks like they could move in April, that’s going to be what everyone is watching for this week. And that does have the potential to keep the [US] dollar not only supported, but to send it higher in the week ahead.”
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