LONDON: The dollar marched to a two-month high versus the yen on Monday and carved out fresh ground against other major currencies after stronger-than-expected underlying U.S. inflation supported the Federal Reserve’s case for a rate hike later this year.
The U.S. currency traded near a two-month high of 121.78 yen JPY= after jumping from a low of 120.64 on Friday, helped by a rise in U.S. Treasury yields triggered by the CPI data.
A move above 122.04 would take the greenback to an eight-year peak against the yen.
“Whether the dollar can breach the 122.04 yen threshold depends on upcoming U.S. data. While a June rate hike is no longer a likelihood, upbeat indicators that would back up Friday’s CPI numbers will fan hopes that the Fed will provide hints at the June meeting on when it might hike rates,” said Junichi Ishikawa, market analyst at IG Securities in Tokyo.
Data on Friday showed core U.S. CPI increased 0.3 percent in April amid rising shelter and medical care costs. It was the largest rise in the core CPI since January 2013 and followed a 0.2 percent gain in March.
The euro was down 0.2 percent at $1.0994 EUR=, having touched a one-month low of $1.0964 earlier in the session.
