The U.S. dollar firmed in the lower 106 yen zone in Tokyo on Tuesday, maintaining momentum from its surge in New York overnight, to hit a nearly six-year high of 106.39 yen on growing expectations that the U.S. Federal Reserve is on track for an early interest rate hike.
At 5 p.m., the dollar fetched 106.31-32 yen compared with 105.98-106.08 yen in New York and 105.12-13 yen in Tokyo at 5 p.m. Monday. It moved between 105.95 yen and 106.39 yen during the day, changing hands most frequently at 106.06 yen.
The euro was quoted at $1.2876-2877 and 136.89-93 yen against $1.2890-2900 and 136.68-78 yen in New York and $1.2942-2943 and 136.05-09 yen in Tokyo late Monday afternoon.
The dollar, which breached the 106 yen line in New York overnight for the first time since early October 2008, firmed further in Tokyo on sentiment that the Fed will hike rates sooner than expected in line with U.S. economic recovery and the Japan-U.S. interest rate gap will widen.
Market participants digesting August U.S. jobs data released last Friday have largely concluded the slowdown in new job creation will not alter the Fed’s course, said Yasuaki Amatatsu, market analyst at the Bank of Tokyo-Mitsubishi UFJ.
“We know Fed members are looking at certain indicators of the U.S. labor market, such as the numbers of long-term unemployed, and these parts of the jobs report were upbeat and lead us to expect hawkish comments following next week’s (Federal Open Market Committee) meeting,” Amatatsu said.