GO
Loading...

Enter multiple symbols separated by commas

Dollar, Euro Gain on Yen as Dealers Discount Japanese Rate Cut

The dollar rose near two month-highs against the yen amid investors' expectations a possible rate hike by the Bank of Japan will fail to boost demand for the Japanese currency.

A sharp fall in crude oil futures also helped the dollar post gains against the euro and the Swiss franc, as analysts said it would likely help shrink the U.S. trade deficit and bolster consumer spending.

Japanese investors, returning to the market from a public holiday on Monday, initiated a fresh wave of selling on the perception that even a widely expected interest rate hike from the Bank of Japan next week will not counter the carry trade.

In a carry trade, investors sell low yielding currencies like the yen for popular high yielders such as the New Zealand dollar.

"What we were really watching today was Japanese investors coming back and selling the yen off again against the higher yielders," said Meg Browne, senior currency strategist at Brown Brothers Harriman.

The yen was the worst performer of the day, falling against all its G7 peers. The dollar was up , with the Japanese currency on course for its largest daily decline in almost a month.

Meanwhile, the euro and sterling were up against the yen.

The BOJ begins a two-day meeting on Jan. 17 to discuss monetary policy, when it may raise rates to 0.50% from 0.25%.

Elsewhere, the euro was down versus the dollar . The European currency has fallen against the dollar in three out of the past five trading sessions as a flurry of stronger U.S. economic data has subdued talk of a rate cut from the Federal Reserve in the first half of this year.

Analysts said strong economic data from Germany helped prevent the euro from sliding further, especially with the European Central Bank's next policy meeting looming on Thursday, which many believe will pave the way for a February rate hike.

The euro gained support from data that showed the German trade surplus hit a record high in November while the country's industrial output that month exceeded expectations.

Sterling rallied broadly after strong UK data rekindled speculation that British interest rates may rise further, although perhaps not as soon as this week, when the Bank of England meets to discuss policy.

The pound was up , having touched an intraday high at $1.9456, after firm data on British retail sales and employment buoyed sentiment ahead of a Bank of England policy meeting later this week.

Contact U.S. News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Don't Miss

  • Mark Cuban and Donald Trump

    Donald Trump appears to have Mark Cuban's vote, at least in terms of how the billionaire real estate mogul is conducting his political campaign.

  • Ferrari 488 Spider

    Ferrari's new 488 Spider will have a V-8 turbo engine and a retractable hard-top roof that lowers in just 14 seconds.

  • Members of the New Horizons science team react to seeing the spacecraft's last and sharpest image of Pluto before closest approach later in the day at the Johns Hopkins University Applied Physics Laboratory (APL) in Laurel, Maryland July 14, 2015.More than nine years after its launch, a U.S. spacecraft sailed past Pluto on Tuesday, capping a 3 billion mile (4.88 billion km) journey to the solar system's farthest reaches, NASA said.

    The New Horizons Pluto flyby mission set records for NASA's social media and web metrics——but why do we care so much?

U.S. Video

  • Wall Street awaits Fed, snaps losing streak

    The stock market has broken its five-session losing streak, but the fate of today's trading will likely rest in the hands of the Fed, which releases its post-meeting policy statement this afternoon.

  • Delivering Alpha unfiltered: Global Opportunity

    Complete video of Andrew Ross Sorkin's panel on how to navigate the wide array of global investment challenges that investors face featuring Chris Ailman, Mary Callahan Erdoes, Eric Mindich and Richard Perry.

  • Cramer: Signs point to another rally

    Mad Money host Jim Cramer shares his view of the market rally in Tuesday's trading session. Finally we have a good setup, he says.