By Myra P. Saefong, MarketWatch
TOKYO (MarketWatch) — The U.S. dollar strengthened against the euro and the Japanese yen Monday afternoon in Asia, supported by upbeat data on the U.S. economy released last week ahead of the Federal Reserve’s decision on interest rates Tuesday.
“At the tail end of last week, U.S. data provided further support to the growing pool of evidence indicating strengthening U.S. economic conditions,” Mitul Kotecha, head of global foreign-exchange strategy at Credit Agricole, said in a note to clients Monday.
The nation’s trade deficit unexpectedly narrowed sharply in October. See the story on U.S. trade deficit.
And the Michigan measure of consumer confidence registered a bigger-than-expected increase in November to reach its highest level since June. See the story on consumer sentiment.
In recent trading, the dollar index (DXY 80.21, +0.14, +0.18%) , a measure of the greenback’s performance against a basket of six other currencies, rose to 80.230 from 80.067 in late North American trading Friday. See more tools and data on currency trading.
The dollar gained more than 1% against the euro and yen last week as a selloff in Treasury bonds pushed yields sharply higher, making U.S. debt more attractive to foreign investors. Read Friday’s currencies column.
Overall, however, “as markets make the last stride towards year end it appears that currencies at least are becoming increasingly resigned to trading in ranges,” said Kotecha.
“Even the beleaguered [euro] has not traded far from the $1.3200 level over the last week despite significant bond market gyrations,” he said. And “news that inflation in China came in well above expectations in November and increased prospects of a rate hike is likely to prompt a limited reaction from a lethargic market.”
Data showing a jump in China’s consumer price index in November came a day after the People’s Bank of China raised banks’ reserve rate requirements by half-a-percentage point. The central bank, however, did not raise rates this weekend as some analysts had expected. See story on market reaction to China’s inaction on rates.
At last check, the euro (EURUSD 1.3203, -0.0002, -0.0151%) slipped to $1.3192 from $1.3232 Friday. See real-time currency quotes and tools.
Against the yen, the dollar (USDYEN 84.1200, +0.1300, +0.1548%) turned up to ¥84.02 from ¥83.91.
