Business
US Economic Recovery Hikes Dollar
The dollar rose for the first time in four days against the yen on speculation the U.S economic recovery will make the nation’s assets more attractive.
The yen fell against all of its 16 most traded counterparts as Japan’s manufacturers raised output in November at the fastest pace in six months, spuring risk demand.
The U.S. currency gained on speculation a report will show consumer confidence rose this month, encouraging the Federal Reserve to end emergency stimulus measurers.
“The U.S. recovery is gaining some traction,” said David Cohen, an economist in Singapore at Action Economics, in a Bloomberg Television interview. “The yen is still under pressure.
The dollar advanced 0.3 per cent to 91.57 yen from 91.30 on December 25. The dollar will increase to 93 yen in the “near term”, according to cohen. The U.S. currency appreciated 0.2 per cent to $1.4388 per euro from $1.4411. The euro was at 131.75 yen compared with 131.64.
The greenback has gained 4.2 per cent versus the euro in December, pairing its 2009 drop to 3 per cent as signs that the U.S. economic recovery is gaining momentum prompted investors to take off bets against the currency.
Hedge funds and large speculators almost halved this month bets that the dollar will drop against its major rivals, according to data compiled by the Commodity Futures Trading Commission in Washington.
Wagers that the dollar will depreciate against eight currencies, including the euro yen and pound, out numbered those on its gain by 136,563 contracts as of December 15, compared with about 250,000 at the end of November.
The dollars most recent gains may be a “head fake” as investors close bet before the end of the year that the greenback will fall, according to Marc chandler, global head of currency strategy at Brown Brothers Harriman & Co.
“I’m not sure this is the real thing”, New York-based chandler said in an interview on Bloomberg Radio.
“People have been short the dollar all year and want to take some money off the table.” A short position is a bet a currency will depreciate. The dollar has fallen this year against all of the 16 most traded currencies except the yen, reversing its gains in 2008 as investors sold Treasuries.