The dollar climbed to a one-month peak against the yen on Tuesday as investors bet the Federal Reserve will begin trimming stimulus sooner than previously anticipated.
Speculation has grown that the Fed will start to reduce its $85 billion-a-month bond-buying program sooner rather than later after last Friday's release of better-than-expected U.S. jobs numbers.
The Fed stimulus program has flooded the world with cheap dollars and expectations it will scale it back earlier than anticipated tend to boost the dollar.
A rise in Japanese shares weighed on the yen, which typically falls when investors are looking to take on more risk. The greenback traded near 100 yen, up 0.5 percent on the day. The dollar index rose 0.3 percent to 81.32, edging back towards a two-month peak of 81.482 struck on Friday.
With the Fed poised to scale back its stimulus and the ECB committed to easy policy for now, analysts expect the diverging monetary outlooks to keep pressure the euro against the dollar.
The Australian dollar was down 0.4 percent at $0.9322 after Australian business confidence fell back from the 3-1/2-year highs reached in October.
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