Dubai:
The dollar strengthened to the highest level in two months against the yen on Monday after data showed stronger than expected jobs growth in the US, confirming the continued strength in the economy.
The yen rose to as much as 114.29 against the dollar, the level last seen in May. The dollar index, which measures the performance of a basket of currencies, was 0.1 per cent higher at 96.14.
“This strength in the US economy will eventually lead to higher inflation and rates, supporting the case for a stronger dollar,” said Phaneendar Bhavaraju, an independent currency trader in Dubai, adding “the dollar strength will be more pronounced against the yen than the other currencies.”
The yen may touch 116-117 levels in the next few weeks, Bhavaraju said. Traders will also eye the US Fed chief’s testimony to the US congress on the road map for further rate hikes.
The dollar index touched a high of 103.65 in December, and it continued to fall after that on the back of weak data in the US, and the touched a low of 95.47 last month. The dirham is pegged to the US dollar.
Exhaustion point:
“I see pound and euro reaching an exhaustion point. The spade of strong data may stop and some weakness in data points may emerge. Euro may top at 1.1450 against the dollar, and start targeting 1.11/1.12 levels,” Bhavaraju added.
Euro last traded at 1.14 against the dollar, while pound was at 1.2870 against the greenback.
