By William L. Watts, MarketWatch
LONDON (MarketWatch) -- The U.S. dollar hit a two-month high against the yen Wednesday, as fears of a potential bankruptcy filing by Japan Airlines and credit-agency concerns about the nation's fiscal outlook pressured the Japanese currency.
The dollar traded at 92.24 yen, up from 92.01 yen in North American dealings late Tuesday, after hitting a session high at 92.26 yen, matching its late October high, according to FactSet Research data.
The dollar index (DXY 77.95, +0.12, +0.16%) , a measure of the greenback against a basket of major currencies, edged up to 78.02 from a reading of 77.81 late Tuesday.
A Japanese government-backed body given the task of rescuing Japan Airlines is reportedly set to guarantee the carrier's operational transactions in the event of a bankruptcy filing, the Nikkei business daily reported. Shares of JAL plunged about 24%. See story on Japan Airlines.
Meanwhile, Reuters said it was told by a Standard & Poor's analyst that Japan's AA credit rating could be in danger if policy measures fail to stabilize and then gradually cut the nation's debt burden. A Moody's analyst offered similar remarks, the report said.
David Jones, chief market strategist at IG Markets, said that overnight news remained the key driver in thin trading conditions.
Traders will be paying close attention to the 92.50 yen level, which provided stiff resistance for the dollar in September. Failure to make a successful run at that level could see the dollar's rally run out of steam in the near term, he said.
The euro, meanwhile, slipped back to trade at $1.4336, down from $1.4360 late Tuesday, as the dollar gained on the yen.
The euro paid little heed to an unexpected contraction in broad money supply for the euro zone during November as well as a further fall in loans to the private sector. The figures raised concerns about the durability of the region's economic recovery if businesses are unable to get access to needed credit, economists said. Read about euro-zone money growth.
The British pound fell 0.3% to trade at $1.5853 as the euro rose 0.2% to fetch 90.41 pence.
