Featured # Markets | 2 years ago

Dollar Hits High Against the Yen

The United States dollar hit its 3-week high Friday against the yen on expectations of a June Fed rate hike. The dollar was little changed against the euro. The dollar hit 110.58 yen, it’s highest level since April 28th. Experts said that minutes from the Federal Reserve’s April meeting, released 2pm on Wednesday, indicated a June rate hike which firmly supported the dollar. Analysts also said it was unlikely for Group of 7 countries to reject Japanese plans to weaken the yen at a G7 meeting in Sendai, Japan.

“The majority of the move is the aftermath of the FOMC minutes,” said senior currency strategist Alfonso Esparza, of Oanda in Toronto. “The gap between what the Fed says and what the Fed does seems to be shrinking,” he noted on traders’ increased expectations that the U.S. central bank could increase interest rates this summer.

Predictions for an aggressive Fed failed to anchor the dollar against the euro. Analysts said traders took some profits from the dollar’s campaign against the euro, after it fell to a seven-week low against the greenback of $1.1178 Thursday. The euro remains on track for a third week decline against the dollar, while the dollar is on its third weekly gain against the yen.
The dollar index, which measures against a basket of six major currencies, was up 0.12 percent at 95.41. The dollar was last up 0.55 percent against the yen at 110.55yen. The dollar was up 0.1 percent against the Swiss franc, below a 10 week high of .9922 franc.

“It is a tad worrisome that the momentum seems to be waning a little bit in the greenback” against the euro, said managing director Kathy Lien, of BK Asset Management in New York. She continued saying that, in addition profit-taking in the dollar ahead of the weekend, the euro likely gained support ahead of next week’s European economic data releases and that data, which will include manufacturing reports, has potential to push the euro higher.

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