London/Washington - The US dollar struck a six-year high against the Japanese currency and pushed up against the euro as well.
The dollar strengthened above 110 yen for the first time since August 2008 before a report that economists said will show US companies added more than 200,000 workers for a sixth month.
Buyers of dollars remained strong despite some weaker signs in the economy, including a sharp drop in consumer confidence and the stronger greenback's mounting negative impact on commodity markets, where other countries are forced to pay higher prices.
The greenback rose versus most of its 16 major peers amid speculation an improving economy will give the Federal Reserve more reason to increase interest rates.
Australia’s dollar slid to an eight-month low after retail sales grew less than economists forecast.
South Korea’s won dropped amid concern authorities will take steps to weaken the currency.
The euro slid toward a two-year low as report showed manufacturing in Germany unexpectedly contracted in September.
“There is nothing else other than the dollar that people can buy,” said Daisaku Ueno, the Tokyo-based chief currency strategist at Mitsubishi UFJ Morgan Stanley Securities.
The US is the only major economy which is on a stable path toward monetary policy normalisation, he said.
The dollar rose 0.2 percent to 109.81 yen at 9:08 am London time after reaching 110.09, the highest since August 25, 2008.
It advanced 0.3 percent to $1.2590 (R14.19) per euro after yesterday touching $1.2571, the strongest level since September 2012.
The single currency slid 0.2 percent at 138.23 yen.
US Jobs
Companies hired 205,000 people in September, the Roseland, New Jersey-based ADP Research Institute is forecast to say, according to the median forecast of analysts in a Bloomberg survey.
The Labor Department payrolls data will say later this week that 217,000 jobs were added in September, according to the economists.
Australia’s dollar slid at least 0.4 percent versus all but three of its 16 major peers after the statistics bureau said retail sales grew 0.1 percent in August, compared with the median forecast for a 0.4 percent advance.
The Aussie fell 0.6 percent to 86.92 US cents and reached 86.63, the weakest since January 24.
“Looking at the detail of the retail sales report, it’s fairly weak,” said Jonathan Cavenagh, a Singapore-based currency strategist at Westpac Banking.
“It’s hard not to see the Aussie dollar making fresh lows. A test of the around-86.60 level seems like a pretty good chance on the back of this data.”
ECB Meeting
The euro has tumbled about 10 percent versus the dollar from a 2 1/2-year high reached in May as the ECB unveiled unprecedented stimulus, including purchases of asset-backed securities, to combat a slide in inflation.
A weaker currency may suit central bank President Mario Draghi by making exports more competitive, as well as increasing consumer prices on higher import costs.
The ECB is forecast to keep interest rates unchanged at its meeting tomorrow, according to analysts surveyed by Bloomberg News, after unexpectedly dropping them to records September 4.
Still, Draghi said September 22 policy makers “stand ready to use additional unconventional instruments” if necessary.
A purchasing managers’ index of manufacturing in Germany, the euro-area’s largest economy, slid to 49.9 last month, the lowest level since June 2013, London-based Markit Economics said today.
Euro-area inflation in September was an annual 0.3 percent, the lowest level in five years, data showed yesterday.
“I expect the ECB to keep a dovish stance and for euro weakness to continue,” said Yasuhiro Kaizaki, vice president for global markets at Sumitomo Mitsui Trust Bank in New York.
“Euro-selling accelerated after the weak CPI data.”
The proportion of euro holdings in allocated official reserves dropped by 3.5 percent, the biggest decline since the first quarter of 2009, according to International Monetary Fund figures released yesterday.
The euro’s share stood at 24.2 percent in the second quarter from 25 percent in the prior three months, while the dollar’s rose to 60.7 percent from 60.3 percent.
In South Korea, the won extended its 4.1 percent decline in the last quarter.
The currency closed at l as low as 1,064.51 per dollar, the weakest level in six months. - Bloomberg News and Sapa-AFP