The U.S. dollar climbed to the highest level against the yen in four and a half months in Tokyo on Wednesday, hitting 103.34 yen at one point on optimism over the U.S. economy driven by upbeat housing data combined with a perceived ebb in geopolitical risks from Ukraine.
At 5 p.m., the dollar fetched 103.29-30 yen compared with 102.86-96 yen in New York and 102.59-61 yen in Tokyo at 5 p.m. Tuesday. It moved between 102.91 yen and 103.34 yen during the day, changing hands most frequently at 102.95 yen.
The euro was quoted at $1.3293-3294 and 137.31-35 yen against $1.3316-3326 and 137.04-14 yen in New York and $1.3351-3352 and 136.97-137.01 yen in Tokyo late Tuesday afternoon.
The dollar held firm in the upper 102 yen zone in the morning, maintaining its gains from New York overnight, before rising above the 103 yen line after midday to reach its highest level since early April as traders rode a wave of dollar buying, said Yuzo Sakai, manager of foreign exchange business promotion at Tokyo Forex & Ueda Harlow.
The dollar’s rapid climb was not due to any fresh developments in Tokyo time but to “a combination of factors” underpinning the dollar, Sakai said, adding that once the dollar crossed the 103 yen barrier, mechanisms such as stop-loss orders set in and amplified its upward momentum.
In New York overnight, the outlook for the U.S. economy brightened as housing starts in July rose 15.7 percent from June to a seasonally adjusted annual rate of 1.09 million, while building permits rose 8.1 percent to 1.05 million.
The dollar was also underpinned by renewed appetite for riskier assets after Russia said President Vladimir Putin and Ukrainian counterpart Petro Poroshenko will hold talks along with EU officials in Minsk, Belarus, next week.