TOKYO (APP) – The dollar climbed towards an eight-year high against the yen Tuesday on mounting speculation that the Federal Reserve will lift interest rates by mid-year as the US economy picks up strength.
In Tokyo, the greenback fetched 121.76 yen, up from 121.15 yen in New York and ehading towards levels not seen since July 2007.
The euro was mixed as the European Central Bank embarked on its long-awaited bond-buying stimulus programme. The single currency bought $1.0807 and 131.56 yen against $1.0854 and 131.49 yen in US trade.
“The US economy is moving in the right direction, and expectations of a rate hike should continue until the Fed’s meeting next week, which means the yen could continue to weaken against the dollar,” Toshihiko Matsuno, chief strategist at SMBC Friend Securities, told Bloomberg News.
Friday’s jobs data added to growing evidence that the US economy is well on the recovery trade and fanned expectations that the Fed will lift rates as early as June.
On Monday, Dallas Fed President Richard Fisher warned of a recession risk if a rate hike was delayed.
“Fisher’s comments have added spice” to the dollar rally, said Daisaku Ueno, chief currency strategist in Tokyo at Mitsubishi UFJ Morgan Stanley.
The dollar has surged this year after the Fed wound up its bond-buying quantitative easing (QE) at the end of 2014.
That came just as the Bank of Japan stepped up its own similar programme, while on Monday, the ECB embarked for the first time on QE as it tried to fend off deflation in the eurozone.
Investors are also keeping an eye on Greece as it prepares for technical talks on extending its crucial bailout on Wednesday.
The Greek government on Monday outlined reforms demanded by lenders in exchange for further cash at a meeting of eurozone finance ministers in
Brussels.
The ministers agreed last month to extend Greece’s current bailout until June as long as Athens comes up with suitable proposals, although investors are on edge after Eurogroup chief Jeroen Dijsselbloem accused the Greeks of wasting time.
