Dollar trading at two-month yen high

TOKYO (AFP) – The dollar was near a two-month high against the yen on Thursday as traders increasingly bet that the Federal Reserve will hike interest rates as early as September.

In Tokyo, the dollar bought 124.75 yen, against 124.88 yen in New York Wednesday when it briefly crossed the 125 yen level, its highest since early June.

The euro stood at $1.0910 and 136.10 yen compared with $1.0904 and 136.18 yen in US trade.

On Wednesday, the Institute for Supply Management s purchasing managers  index report on a July surge in US services sector growth contrasted with a disappointing number on jobs growth last month from payroll firm ADP, with only 185,000 jobs added.

Traders are now focusing on Friday s official US employment figures.

The Fed has said any rate hike, widely expected by September or December, was dependent on signs of a pick-up in the world s top economy.

“Last night s (PMI) report fell squarely into the category of incoming data releases that argue strongly in favour of September  lift-off ,” Ray Attrill, the global co-head of currency strategy in Sydney at National Australia Bank, said in a commentary.

Dollar buying sentiment also got a lift after Federal Reserve Bank of Atlanta President Dennis Lockhart told The Wall Street Journal this week that he supports lifting rates in September barring an unexpected economic downturn.

Lockhart told the paper it “will take a significant deterioration in the economic picture for me to be disinclined to move ahead”.

The greenback may move closer to the 125 yen level on Thursday ahead of the hiring data, Keisuke Hino, a foreign-exchange trader at Mizuho Bank in New York, told Bloomberg News.

“While there is wariness among investors about how far they could test the dollar s upside against the yen, its downside is limited,” he said.

The Bank of Japan begins a two-day meeting Thursday, with all eyes on signs for when policymakers may launch further easing measures.

The dollar was mixed against other Asia-Pacific currencies.

It fell to Sg$1.3843 from Sg$1.3857 on Wednesday, to Tw$31.64 from Tw$31.66, to 63.77 Indian rupees from 63.86 rupees, and to 1,169.30 South Korean won from 1,172.63 won.

The greenback inched up to 13,524.50 Indonesian rupiah from 13,498.0 rupiah, to 45.78 Philippine pesos from 45.75 pesos, and to 35.18 Thai baht from 35.09 baht.

The Australian dollar eased to 73.32 US cents from 73.54 cents, while the Chinese yuan fetched 20.09 yen against 20.05 yen.

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