Dollar recaptures ¥103 on tapering speculation
LOS ANGELES (MarketWatch) - The U.S. dollar revisited the ¥103 level against the Japan's currency Monday, pushing higher after monthly U.S. jobs data suggested the Federal Reserve may start paring the pace of U.S. monetary stimulus as early as next week.
The dollar bought 103.08 Japanese yen - and rose to as high as ¥103.23, according to FactSet data - strengthening from ¥102.89 late Friday. The dollar on Friday jumped from the ¥101 level after the U.S. Labor Department said the economy created 203,000 jobs in November, outstripping expectations for a rise of 180,000 jobs. The unemployment rate also fell to 7% from 7.3%.
The greenback had spent some time above the ¥103 level last week, logging fresh six-month highs against the Japanese currency.
The Federal Reserve currently purchases $85 billion a month in U.S. government debt and mortgage-backed securities in an effort to support economic growth, and the asset purchases have been considered a drag on the value of the greenback. The jobs report, along with a string of better-than-expected economic data, have led to expectations that the Fed will begin reducing asset purchases. Such a decision by could be made at the Fed's meeting on Dec. 17-18.
The euro also extended gains against the yen, fetching more than ¥141 for the first time since October 2008 at the height of the global financial crisis.
Yen weakness aided exporters on the Japanese equity market Monday, with the Nikkei Stock Average climbing more than 2%. Investors also reacted to largely upbeat trade and inflation data from China.
The dollar now looks set for 'another run at the ¥103.75 high set in late May. Support has been established ... in the ¥101.65-80 area,' Marc Chandler, global head of currency strategy at Brown Brothers Harriman, said in a report Sunday. Chandler also said that the gross short-yen position is near a five-year high.
Meanwhile, Japan on Monday said economic growth in the third quarter was slower than it previously estimated as capital expenditure wasn't as strong as initially thought. Japanese officials earlier this year launched an aggressive campaign to stimulate economic activity and fight deflation, spurring investors in May to push the dollar above the ¥100 mark for the first time since April 2009.
In other forex action Monday, the euro fetched $1.3704, slightly more than $1.3698 on Friday. Investors later Monday will look for cues from German trade data and industrial production figures for October.
The ICE dollar index , which tracks the greenback against six major rivals, fell to 80.266 from 80.286 on Friday. The index lost 0.5% last week.
However, the WSJ Dollar Index , which uses a slightly larger comparison basket, edged up to 73.36 versus 73.34.
The British pound traded at $1.6346, up from $1.6339. The Australian dollar was unchanged at 91.03 U.S. cents.
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