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US dollar hits 3-week high vs yen after NY Fed president's comments
[SINGAPORE] The US dollar hit a three-week high against the yen on Tuesday, after an influential Federal Reserve official said US inflation should rise alongside wages, supporting expectations for the Fed to keep raising interest rates.
The US dollar rose to 111.775 yen at one point, reaching its strongest level since May 26. That marked a gain of about 2.7 per cent from the US dollar's near two-month low of 108.81 yen set last Wednesday.
The greenback last stood at 111.685 yen, up 0.2 per cent on the day.
The US dollar was lifted on Monday when New York Fed President William Dudley said that tightening in the labour market should help drive up inflation.
That helped offset concerns among some investors that stubbornly low inflation could prevent the Fed from raising interest rates further this year.
Mr Dudley's comments reinforced the message from last week's Fed meeting and gave a boost to the US dollar, said Teppei Ino, analyst for Bank of Tokyo-Mitsubishi UFJ in Singapore.
The US dollar is now near some key technical resistance levels, including its May 24 intraday high of 112.13 yen, Mr Ino said.
"It's sort of at a crossroads now. If it gets through these levels, that could open the way for further gains, at least from a technical perspective," he said.
Separately, Chicago Fed President Charles Evans said on Monday it may be worthwhile for the US central bank to wait until year-end to decide whether to raise interest rates again.
The greenback has edged higher since the Fed raised interest rates last Wednesday and announced it would begin cutting its holdings of bonds and other securities later this year, while indicating that a recent softening in inflation was seen as transitory.
Against a basket of six major currencies, the US dollar rose to as high as 97.609 at one point on Tuesday, its highest level since May 30.
The euro held steady at US$1.1145, having retreated from a seven-month peak of US$1.1296 set on June 14.