Dollar hits near 6-yr high vs. yen before U.S. jobs data

September 5, 2014

Tokyo-Japan (Sept 5)  The U.S. dollar hit its highest level in nearly six years against the yen on Friday in  Tokyo  on growing optimism that a  U.S. Labor Department  report due later in the day will confirm strength in the world's largest economy.

At  5 p.m.  , the dollar fetched  105.24-26 yen  compared with  105.21-31 yen  in  New York  and  104.94-95 yen  in  Tokyo  at  5 p.m. Thursday  , after briefly rising to  105.71 yen  , a level last seen in  October 2008  . Its lowest quote for the day was  105.23 yen  , changing hands most frequently at  105.56 yen  .

The euro was quoted at  $1.2937-2938  and  136.15-19 yen  against  $1.2940-2950  and  136.20-30 yen  in  New York  and  $1.3142-3143  and  137.92-96 yen  in  Tokyo  late Thursday afternoon.

The dollar hit the peak against the yen on Friday morning, retaining momentum from overnight in  New York  , where data on the U.S. service sector in August and a private jobs report supported the upbeat outlook and fed expectations of rises in U.S. long-term interest rates.

"Economic indicators coming from  the United States  in the third quarter have all been very strong," said  Toru Moritani  , chief market economist at  Sumitomo Mitsui Banking Corp.  "Currency traders are expecting the dollar's uptrend against the yen to continue."

The dollar later slipped as some market players locked in gains ahead of the upcoming jobs report.

"If the numbers are strong we could see the dollar rise back to the higher end of  105 yen  , maybe even test the  106 yen  line," said  Yuzo Sakai  , manager of foreign exchange business promotion at Tokyo Forex &  Ueda Harlow  .

The result of the report will be closely scrutinized as the U.S. Federal Reserve weighs the timing of a hike in its benchmark short-term interest rate, currently near zero. Fed chief  Janet Yellen  has said the hike could come sooner if labor market conditions improve past expectations.

The euro traded near a 14-month low marked overnight against the dollar after the  European Central Bank  said it was taking its main interest rates to new record lows after rate cuts in June.

The ECB reduced its benchmark rate by 0.1 percentage point to 0.05 percent and its deposit rate by 0.1 point to minus 0.20 percent, and also announced programs to purchase asset-backed securities and covered bonds from October to encourage lending to shore up the flagging eurozone economy.

ECB President  Mario Draghi  said the decision at Thursday's policy meeting was not unanimous and that quantitative easing, Fed-style outright purchases of government bonds, was also discussed by policymakers as a possible measure.

Source: Japan Economic Newswire

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