BS: Dollar Advances Against Yen on U.S. Recovery Optimism
The dollar climbed for a fourth day against the yen as Treasury yields at three-month highs boosted the allure of dollar-denominated assets.
The greenback fell against the euro as German Chancellor Angela Merkel said the European Central Bank’s insistence on conditionality in return for assistance to indebted countries is “completely in line” with her nation’s objectives to end the turmoil. The number of U.S. building permits jumped to the highest level in four years as jobless claims held steady, adding to speculation the Federal Reserve won’t add stimulus when policy makers meet next month. The yield on the 10-year Treasury note touched 1.86 percent, the highest since May 11.
“Treasury yields may be helping dollar-yen a little higher,” said Brian Kim, a currency strategist at Royal Bank of Scotland Group Plc in Stamford, Connecticut. “None of the data has been such that it would really have people change their outlook for the U.S. economy or for that matter what the Fed could do.”
The dollar rose 0.3 percent to 79.23 yen at 11:35 a.m. New York time, after reaching 79.41 yen, the strongest level since July 12. It fell 0.6 percent to $1.2363 per euro. The 17-nation shared currency added 0.9 percent to 97.95 yen.
The difference between the yield on the 10-year U.S. benchmark and a similar maturity Japanese security widened to 100 basis points yesterday, the most since May 10. It was at 95 basis points today.
The dollar is poised to test resistance at 79.80 yen and could reach 80.50 to 80.60, Cilline Bain, a London-based technical analyst at Credit Suisse Group AG, wrote today in a note to clients.
To contact the reporters on this story: Joseph Ciolli in New York at jciolli@bloomberg.net; John Detrixhe in New York at jdetrixhe1@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
