Dollar Rises Seventh Day Versus Yen on Outlook for Higher Rates

The dollar rose for a seventh day against the yen, the longest winning streak since October, before U.S. economic...

The dollar rose for a seventh day against the yen, the longest winning streak since October, before U.S. economic data this week that may add to speculation the economy is strong enough to handle higher interest rates.

A gauge of the greenback jumped 1.3 percent last week after some Federal Reserve officials said they would consider raising rates at the next meeting in April. The yen weakened versus all of its 16 major peers Monday as gains in Japanese shares and U.S. stock futures reduced demand for haven assets.

“Expectations for solid U.S. economic data this week are lifting the dollar,” said Koji Fukaya, chief executive officer at FPG Securities Co. in Tokyo. “It’s hard to find a reason to sell dollars. Concerns over the U.S. economy, China, oil, which had fueled risk aversion, are subsiding to underpin the dollar and weigh on the yen.”

The dollar appreciated 0.4 percent to 113.55 yen as of 7:51 a.m. in London on Monday, extending its advance in the past seven days to 1.9 percent. The U.S. currency was little changed at $1.1163 per euro. The yen dropped 0.4 percent to 126.76 per euro.

Easter Holiday

Financial markets including those of the U.K, Germany, Australia, and New Zealand are shut Monday for the Easter holiday. Trading will take place as normal in the U.S.

U.S. employers added 208,000 workers in March, after hiring 242,000 the previous month, according to a Bloomberg survey before the Labor Department releases the figure on April 1. Data to be released Monday include personal income and spending and the Fed’s favored inflation gauge.

“The dollar will be highly sensitive to U.S. 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 dollar is prone to react more to positive U.S. economic news.”

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Speculators and hedge funds trimmed bets for a third week that the U.S. currency will strengthen against eight of its major peers, according to data from the Commodity Futures Trading Commission.

Fed Speakers

U.S. policy makers should consider raising rates in April, Fed Bank of St. Louis President James Bullard said March 23. Fed Bank of Philadelphia President Patrick Harker said last week the U.S. economy is resilient, and he’d support a quarter-point increase if that continues.

“It’s all about Fed expectations,” Jason Schenker, president and chief economist of Prestige Economics LLC, 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 dollar not only supported, but to send it higher in the week ahead.”

–With assistance from Yvonne Man and Kevin Buckland To contact the reporter on this story: Chikako Mogi in Tokyo at cmogi@bloomberg.net. To contact the editors responsible for this story: Nicholas Reynolds at nreynolds2@bloomberg.net, Amit Prakash

By: Chikako Mogi

©2016 Bloomberg News

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