The dollar climbed against the yen Tuesday, fueled by a surge in stock-buying sentiment as hopes grew that Japan’s Prime Minister Shinzo Abe will unveil a new cabinet lineup seeking a more aggressive approach to pension-fund investment.
The prospect of more pension reserve funds flowing into equities helped trigger a 1.5% rise in the Nikkei Stock Average, which in turn boosted the greenback USDJPY, +0.56% to a seven-month high against the yen.
The euro EURUSD, -0.08% meanwhile, weakened to another one-year low against the dollar, amid expectations for additional monetary easing by the European Central Bank grew and fears about geopolitical instability in Ukraine.
At last check, the dollar was at ÂĄ104.92 compared with ÂĄ104.34 late Monday in North America.
The euro was at $1.3115 from $1.3129.
Osamu Takashima, chief FX strategist at Citigroup Global Markets Japan, said the yen’s recent weakness gives the impression that investors “have quietly started factoring in additional monetary easing by the Bank of Japan” following disappointing economic data last week, such as Japanese industrial production. That will make the yen vulnerable to further moves ahead of the BOJ’s policy meeting two-day meeting through Thursday.
In other currency trade, the U.K. pound fell to $1.6532, from $1.6608.
The WSJ Dollar Index BUXX, +0.34% a measure of the dollar against a basket of major currencies, was up 0.3% at 75.06.
