The dollar advanced to an almost six-year high versus the yen after Treasury yields climbed on speculation economic reports this week will support the case for the Federal Reserve to raise interest rates next year.
The greenback touched a 14-month high against major peers and was 0.1 percent from the strongest since July 2013 against the euro before the U.S. data forecast to show jobless claims fell. Low volatility across financial markets may signal traders are underestimating rate increases, San Francisco Fed researchers said. The pound had its biggest drop in 14 months yesterday before a Sept. 18 vote on Scottish independence.
“Higher U.S. yields are fueling U.S. dollar buying,” said Naohiro Nomoto, an associate for foreign-exchange trading at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “There looks to be further upside in U.S. yields, especially on the long end. There is speculation that the Fed will revise its forward guidance at next week’s meeting.”