The US dollar is testing five-week highs against major currencies on Monday, especially firm against the price-sensitive Japanese yen. Investors expect the Federal Reserve to maintain a tight monetary base to take longer to deliver U.S. yields. higher.
The range will be challenged or outlined by this week's key data i.e. the U.S. user prices data. which will be released on Tuesday.
The US dollar index that measures the US dollar against six major currencies traded solid 0.03% at a trading level of 103.573. The dollar strengthened as much as 1% to 132.76 yen, close to 132.9 last week, the highest for the dollar versus yen since Jan. 6.
The euro hit a one-month low of 1.0656 in Asian trade, but was last at $1.0693, up 0.15%. The British pound strengthened 0.3% to $1.2096, staying close to a month low of $1.1961 reached last week.
U.S. results the higher one is the main driver of the weaker yen. U.S. treasury yield benchmarks The 10 year hit a new six week high of 3.755% and the two year yield hit a new six week high of 4.543%.
Japan's currency has fallen sharply last year, hitting a 32-year low of 151.94 per dollar as the US rate rises while the Japanese rate remains near zero.
It has come back strong this year due to U.S. levels. looks to be nearing its peak, and on the assumption the Bank of Japan will move on from its very lax stance, but both now look like it will come later than expected.
Sources on Friday stated that former Bank of Japan institutional expert Kazuo Ueda was set to become the next governor. In a chat meeting on the same day, Ueda said it was only natural for the BOJ to stick to its ultra-easy bottom at all times.
"The market is starting to understand that the new governor is not going to be what it (the investor) is at first," said Naka Matsuzawa, head of strategy at Nomura in Tokyo.
Meanwhile, in the United States, stronger jobs data released in early February suggesting the economy is performing solidly, meaning there is less danger for the Fed to keep rates high.
Elsewhere, the Swiss franc firmed after Swiss inflation data reported higher than expected. The dollar slumped to as low as 0.9213 Swiss franc.
