Dollar Reaches Six-Month High as Improving Economy Boosts Allure

The dollar touched a six-month high against the yen after signs of improvement in the world’s largest economy boosted the allure of U.S. assets.

The Bloomberg U.S. Dollar Index was near a two-week high before data next week forecast to show U.S. manufacturing expanded for a sixth month. The euro retreated from a four-year high against the yen as technical indicators signaled its recent gains were excessive. The Australian dollar rallied from a two-month low after business investment unexpectedly grew.

“A string of reasonably positive data in the U.S. is probably going to help the dollar via higher treasury yields,” said Michael Turner, a debt and currency strategist at Royal Bank of Canada in Sydney. Yields on Japanese government bonds “have been falling fairly consistently for the past four or five months and that’s kept the yen fairly weak.”

The dollar was little changed at 102.13 yen as of 6:42 a.m. in London from yesterday, after touching 102.28, the strongest level since May 29. It traded at $1.3583 against the euro from $1.3579. The shared currency was unchanged at 138.73 yen after touching 138.84, the highest since June 2009.

The Bloomberg U.S. Dollar Index, which tracks the currency against 10 major peers, declined 0.1 percent to 1,020.55. It rose 0.3 percent to 1,021.55 yesterday, the highest close since Nov. 12.

The benchmark U.S. 10-year yield gained three basis points, or 0.03 percentage point, to 2.74 percent yesterday. U.S. markets are closed for Thanksgiving holiday. Similar-dated Japanese government bonds yielded 0.60 percent today.


Copyright © 2012 Forex Affairs