LONDON: The dollar hit its highest since December 2002 against the yen on Thursday due to expectations that U.S. interest rates will rise later this year, while the Australian dollar struck a six-week low following disappointing capital expenditure data.
The greenback soared as high as 124.30 yen, and last stood at 124.15 yen.
“Macro funds betting on a September Fed rate hike have increased their long exposure to the dollar, which was the main driving force behind the rise this week,” said Yunosuke Ikeda, head of FX strategy at Nomura Securities, which has many hedge fund clients.
In addition, a rise in Tokyo stocks also helped to boost risk appetite and hurt the safe-haven yen, which has been under pressure also from the Bank of Japan’s aggressive monetary stimulus since 2013.
“Longer-term, little stands in the way of further JPY losses,” said Greg Moore, senior currency strategist at RBC.
But traders added that players are now wary of potential verbal intervention by Japanese officials to steady the yen.
On Wednesday, Japanese policymakers cautioned markets against pushing the yen down too rapidly.
Finance ministers and central bankers from the Group of Seven industrialized nations will discuss recent foreign exchange movements when they meet in Germany this week, a senior Canadian official said on Monday.
