Dollar climbs to eight-month high versus yen on higher U.S. yields
The dollar rose to an 8-month high against the yen on Friday, lifted by U.S. bond yields which resumed their rise in Asia after the Thanksgiving break shut markets in the United States.
The dollar was up 0.3 percent at 113.730 yen JPY= after hitting an 8-month high of 113.800 yen. It was on track to rise 2.6 percent on the week.
The euro nudged down 0.1 percent to $1.0545 EUR= and toward $1.0518, its lowest since March hit in the previous day. The common currency was poised to lose 0.3 percent this week.
"We kept expecting the dollar to adjust lower during its bull phase but that has not happened yet, since there has been no real opportunity for selling to take hold," said Shin Kadota, chief Japan FX strategist at Barclays in Tokyo.
Lifted by higher yields, the dollar index was up 0.2 percent at 101.860 after rising to a 13-1/2-year high of 102.050 overnight. It was enroute for a 0.6 percent gain on the week.
ECB Says It Can Shield Euro Area From Global Finance Instability
The European Central Bank is confident it will be able to continue shielding the euro area from the risk of a sudden correction in asset prices, after political events such as the election of Donald Trump threaten to increase volatility in coming months.
“We are certainly seeing a correction coming from the U.S.,” ECB Vice President Vitor Constancio said on Thursday in an interview with Bloomberg TV’s Matt Miller. “The ECB will continue to exert its stabilizing role, so I don’t think there will be significant contagion to Europe.” Constancio spoke on the occasion of the publication of the ECB’s twice-yearly Financial Stability Review.
The report warns that the risk of an abrupt global market correction has intensified on the back of widespread political uncertainty, posing a threat to banks, stability and economic growth. While the policies of incoming President Trump may lead to higher spending and faster inflation in the U.S., their effect on the euro area is difficult to gauge given the possibility of protectionist tit-for-tats and higher chances of populist victories in votes across the continent.
Reference: Bloomberg, Reuters
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