Dollar scales 6-year peak versus yen; euro's woes deepen

[LONDON] The dollar rose above 110 yen for the first time in six years and held near a two-year peak against the euro on Wednesday as investors added to bets that US economic data will lead the Federal Reserve to tighten monetary policy.

Commodity currencies such as the Australian and New Zealand dollars suffered as oil and copper prices remained under pressure, with the Aussie hit particularly hard after weaker-than-expected retail sales data.

The dollar was up 0.25 per cent at 109.90, having risen past 110 yen during Asian trade. It eased from a high of 110.09 yen on profit taking, but most traders said that the outlook for the dollar remained bullish. "The yen remains under pressure," said Esther Reichelt, currency strategist at Commerzbank. "Good US data might lead to a serious test of the technically important resistance at 110.67 yen, which was the August 2008 high." Better-than-expected US data, especially labour market numbers and manufacturing activity, could fan speculation of an early interest rate rise by the Fed. "Friday's non-farm payrolls will be key, as it could raise rate hike expectations another notch," said Shinichiro Kadota, chief Japan FX strategist at Barclays Bank in Tokyo.