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Dollar higher against yen as sentiment improves

Published 10/20/2014, 06:25 AM
Updated 10/20/2014, 06:25 AM
Dollar rises against yen as market sentiment strengthens

Dollar rises against yen as market sentiment strengthens

Investing.com - The dollar was higher against the yen on Monday as upbeat U.S. economic reports continued to underpin market sentiment, dampening demand for the traditional safe haven yen.

USD/JPY was up 0.18% to 107.06 after rising to session highs of 107.40 earlier.

Data on Friday showed that U.S. consumer sentiment rose to the highest level since July 2007 this month and another report showed that U.S. housing starts rose more than expected in September.

The data reinforced expectations that the Federal Reserve will raise interest rates in the second half of 2015 and calmed investor jitters at the end of a volatile week of trading.

The dollar fell to a five week low against the yen mid-week and weakened against the other major currencies amid fears that slower global growth would act as a drag on the U.S. economy.

The euro was also higher against the yen, with EUR/JPY up 0.25% to 136.73.

Demand for the yen was hit by speculation that Japan’s pension fund is growing closer to increasing its holdings of stocks and overseas assets, which would drive up demand for foreign currencies.

Elsewhere, the single currency edged higher against the dollar, with EUR/USD easing up 0.10% to 1.2772.

Concerns over the stagnating euro zone economy continued to weigh on the single currency. The European Central Bank launched its new stimulus program on Monday, purchasing covered bonds in a bid to boost liquidity in the euro area economy.

The dollar slipped lower against the pound and the Swiss franc, with GBP/USD rising 0.28% to trade at 1.6137 and USD/CHF sliding 0.15% to 0.9444.

The commodity linked dollars gained ground, with AUD/USD up 0.41% to 0.8779, NZD/USD adding 0.52% to trade at 0.7957 and USD/CAD slipping 0.20% to 1.1253.

The US dollar index, which tracks the performance of the greenback against a basket of six major currencies, dipped 0.11% to 85.22, holding above last week’s three-week lows of 84.53.

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