Dollar gains against the yen

Published: 23 Aug at 9 AM Tags: Euro, Dollar,

An increase in US Treasury yields and confidence that the Federal Reserve will begin to scale back its quantitative easing programme have helped the dollar regain its footing against the yen. Having risen 1 per cent on Thursday against the Japanese currency the dollar was last up 0.3 per cent to 98.96 yen.

On Thursday, the 10-year Treasury yield hit 2.936 per cent, its highest level in two years, before settling today at 2.903 per cent. An increase in yields often makes assets priced in dollars more attractive.

On Wednesday the Fed revealed minutes from its July policy meeting, the results seem to suggest that the central bank is still looking to cut its bond buying as early as September.

Some traders expect the dollar to become the focus of Japanese importers and this is likely to keep the yen under pressure, at least in the short-term. Elsewhere the euro dropped 0.1 per cent to $1.3345. However, the single currency edged up 0.1 per cent against the yen to hit 132.04 yen. This follows Thursday’s 1 per cent gain against the yen.

The euro is also 0.5 per cent up against the pound at 85.68 pence. The euro could come under pressure from the dollar as the European Central Bank looks like it will keep interest rates low as the Fed heads towards a tapering of its easy money policy.