US$ rises on fresh expectations of rate hike

Singapore

THE US dollar rose in Asian trade on Tuesday on fresh expectations the US central bank may raise interest rates in the second half of the year, analysts said.

The euro bought US$1.1137 in afternoon Singapore trade, down from US$1.1146 in New York late on Monday. The US dollar also rose to 120.15 yen from 120.14 yen in volatile trade. Against the Japanese currency, the euro was changing hands at 133.67 yen from 133.92.

Trading, however, was thin as the Japanese market was closed for a public holiday.

Bernard Aw, market strategist at IG Markets in Singapore, said the US dollar got a boost from "fresh expectations that the Fed rate hike in the second half of this year is back on the table after good employment numbers last week".

Weekly claims for US unemployment insurance benefits plunged to their lowest level in 15 years in the week to April 25, according to the US Labor Department. It said initial jobless claims dropped by 34,000 from the previous week to 262,000, the lowest level since April 2000. US factory orders also rebounded in March after seven straight months of declines, pushed higher by commercial and defence aircraft orders, the Commerce Department said on Monday.

Doubts about the timing of a raise in ultra-low US interest rates had emerged after figures showed the world's biggest economy expanded by just 0.2 per cent in the first quarter, well below expectations, weighed down by an exceptionally cold winter. A rise in US interest rates is typically supportive of the US dollar. But with the impact of the weather behind, analysts are expecting further robust data from the US this week, including non-farm payrolls, a closely watched barometer of the country's jobs market and consumption demand.

The US dollar was mostly higher against other Asia-Pacific currencies. It rose to 1,082.41 South Korean won from 1,079.60 on Monday, to NT$30.699 from NT$30.68 and to 13,025 Indonesian rupiah from 13,011. The US dollar also advanced to 63.5150 Indian rupees from 63.4225 and to S$1.3361 from S$1.3319, while falling to 44.5870 Philippine pesos from 44.63.

The Australian dollar was up at 78.73 US cents from 78.24. The Chinese yuan climbed to 19.3596 Japanese yen from 19.3415 yen. AFP