USD/JPY Above 106 on Fed Policy Bets

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.”


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.