The U.S. dollar traded in the upper 113 yen zone for most of Tuesday in Tokyo, largely maintaining its gains from New York overnight when the U.S. currency rose above 114 yen for the first time since December 2007 on expectations Japanese and U.S. monetary policy are set to diverge further.
At 5 p.m., the dollar fetched 113.57-59 yen compared with 113.99-114.09 yen in New York at 5 p.m. Monday. Financial markets in Tokyo were closed for a public holiday on Monday. It moved between 113.28 yen and 114.03 yen during Tokyo trading on Tuesday, changing hands most frequently at 113.60 yen.
The euro was quoted at $1.2505-2507 and 142.02-06 yen against $1.2477-2487 and 142.30-40 yen in New York late Monday afternoon.
The dollar had risen rapidly against the yen following the Bank of Japan’s surprise announcement last Friday that it will further ease monetary policy by expanding its asset buying program, putting it in sharp contrast with the U.S. Federal Reserve, which is gearing up to raise interest rates having ended its own quantitative easing program last month.
Monday’s unexpectedly positive October U.S. manufacturing data from the Institute for Supply Management boosted expectations the Fed will take a hawkish tack in the face of U.S. economic recovery, sending the dollar as high as 114.21 yen in New York.
But the dollar’s upside was capped in Tokyo ahead of the risk-heavy events of U.S. midterm elections on Tuesday and monthly U.S. jobs data looming on Friday, said Shinichiro Kadota, foreign exchange strategist at Barclays Bank.