Dollar at 4-month highs vs. yen on Fed tapering view

November 21, 2013

San Francisco (Nov 21)  The dollar rose to more than four month highs against the yen on Thursday despite mixed U.S. economic data after the minutes of the Federal Reserve's latest meeting indicated that stimulus tapering could begin in the next few months.

During U.S. morning trade, USD/JPY advanced 0.96% to 100.99, the highest since July 10.

The dollar strengthened after Wednesday's minutes of the Fed's October meeting indicated that the bank could start scaling back its stimulus program in the "coming months" if the economy continues to improve as expected.

The Department of Labor said Thursday the number of people filing for initial jobless benefits last week fell by 21,000 to a seasonally adjusted 323,000, beating expectations for a decline of 9,000.

The upbeat jobs data offset a report showing that manufacturing activity in the Philadelphia-region expanded at the slowest pace in six months in November.

The Federal Reserve Bank of Philadelphia said that its manufacturing index fell to 6.5 in November, from 19.8 in October. Economists had expected the index to decline to 15.0.

A separate report showed that U.S. producer price inflation declined 0.2% in October, in line with expectations.

Elsewhere, EUR/USD was up 0.15% to 1.3459, after falling as low as 1.3399 earlier.

The euro recovered from session lows after European Central Bank President Mario Draghi downplayed speculation over negative deposit rates in the euro zone during a speech in Germany.

Data released earlier on Thursday showed that manufacturing activity in the euro zone expanded in line with forecasts in November, but service sector activity declined unexpectedly, indicating that the recovery in the bloc is losing momentum.

The pound rose to session highs against the dollar, with GBP/USD up 0.25% to 1.6144.

The dollar slipped lower against the Swiss franc, with USD/CHF sliding 0.10% to 0.9152.

The greenback was broadly stronger against the Australian, New Zealand and Canadian dollars, with AUD/USD dropping 0.99% to 0.9241, NZD/USD losing 0.80% to trade at 0.8205 and USD/CAD rising 0.63% to 1.0512.

Australia's dollar came under heavy selling pressure after Reserve Bank of Australia Governor Glenn Stevens said the bank believed that intervening in the currency market to lower the currency's value could be effective in the right circumstances.

The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, edged up 0.03% to 81.11.

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