By Hiroyuki Kachi
The dollar hit a fresh nine-month high against the Japanese yen in early morning Asia trade Thursday before losing some of its momentum gained from encouraging U.S. economic data and a deal reached by global oil producers to cut output.
Firm manufacturing data from China added to the upbeat news for investors, though some economists said the dollar might be nearing a sweet spot for profit-taking.
Around 0230 GMT, the U.S. currency was changing hands at Y114.48, after touching as high as Y114.83, its highest since Feb. 16. The dollar was trading at Y114.45 late Wednesday in New York. The WSJ Dollar Index, a measure of the U.S. dollar againsta basket of major currencies, was down 0.04% at 91.94. The euro was at $1.0592 from $1.0589 late Wednesday.
Solid U.S. data overnight bolstered the view that the Federal Reserve might take a more hawkish view on monetary policy in coming months, pushing the dollar through Y114 then Y114.5 overnight.
"It seems expectations for [Friday's] U.S. jobs data have grown," given strong U.S. private sector payrolls data overnight, said Mizuho Securities FX strategist Kenji Yoshii.
The deal by the 14-nation Organization of the Petroleum Exporting Countries to cut oil output also strengthened market sentiment, propelling crude prices more than 8% after months of wrangling and uncertainty about the ability of the once-mighty group to strike an agreement. The OPEC cuts were deeper than many analysts had expected, amounting to about 1% of global production.
Still, the dollar was struggling to stay above Y114.50 let alone breach Y115, with the rapid pace of gains--more than 12% since the U.S. election--again giving some investors pause to cash in profits.
"The dollar has already reached a sweet spot," making it ripe for selling, said Mr. Yoshii, adding that more data such as the U.S. ISM manufacturing report and the jobs data would determine whether the ongoing appetite for risk-taking would persist and whether the dollar's gains were sustainable.
As the greenback came off its highs, the release of better-than-expected Chinese manufacturing data offered support for the dollar. An official gauge of China's factory activity rose for a second straight month in November, adding to recent signs of firmness in the world's second-largest economy. China's official manufacturing purchasing managers' index increased to 51.7 from October's 51.2.
In other currency trade, the euro was at Y121.31 from Y121.21 overnight.
Interbank Foreign Exchange Rates At 20:50 EST / 0150 GMTLatest Previous %Chg Daily Daily %Chg
Dollar Rates Close High Low 12/31
USD/JPY Japan 114.52-53 114.45-46 +0.06 114.83 114.26 -4.79
EUR/USD Euro 1.0592-95 1.0588-91 +0.04 1.0606 1.0586 -2.46
GBP/USD U.K. 1.2513-15 1.2505-07 +0.06 1.2542 1.2504 -15.08
USD/CHF Switzerland 1.0169-73 1.0172-76 -0.03 1.0189 1.0161 +1.51
USD/CAD Canada 1.3415-20 1.3434-39 -0.14 1.3442 1.3412 -3.04
AUD/USD Australia 0.7389-93 0.7383-87 +0.08 0.7399 0.7374 +1.43
NZD/USD New Zealand 0.7077-83 0.7079-85 -0.03 0.7096 0.7072 +3.61
EUR/JPY Japan 121.29-33 121.18-22 +0.09 121.56 121.08 -7.25
Source: Tullett Prebon
Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com.
(END) Dow Jones Newswires
November 30, 2016 21:57 ET (02:57 GMT)
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