Wednesday, September 19, 2018

© Reuters.  Dollar hits 3-month highs versus yen© Reuters. Dollar hits 3-month highs versus yen – The dollar hit fresh three-month highs against the yen on Wednesday, boosted by speculation over the course of U.S. monetary and fiscal policy and upbeat U.S. factory data.

USD/JPY was trading at 114.10 by 08:52 AM ET (12:52 AM GMT), after hitting an intra-day high of 114.25, which was the strongest level since July 11.

The dollar extended early gains against the Japanese currency after the Commerce Department reported that U.S. durable goods orders rose 2.2% in September, while core capital goods orders rose 3.8% year-on-year.

The data indicated that strong business spending is helping to support manufacturing.

The dollar had already been bolstered in recent sessions by hopes for tax reforms after the Senate approved a budget measure that will allow Republicans to pursue tax cuts without Democratic support.

Demand for the dollar has also been underpinned by speculation over an accelerated pace of interest rate increases if current Federal Reserve Chair Janet Yellen, whose term expires in February, is replaced by a more hawkish candidate.

President Donald Trump has said he is weighing five candidates to lead the Fed, including Yellen, who is perceived by investors as the least hawkish.

Speculation over a more hawkish Fed leader helped offset concerns over a feud in the Republican Party which could hamper Trump’s efforts to push through his legislative agenda.

The euro pushed higher against the dollar, with EUR/USD rising 0.14% to 1.1779 ahead of Thursday’s European Central Bank meeting, where President Mario Draghi was expected to update markets about the future of the banks stimulus program.

Sterling was broadly higher, with GBP/USD advancing 0.89% to 1.3253 after data showing that UK economic growth picked up the third quarter was seen as raising the chances of an interest rate hike by the Bank of England next month.

EUR/GBP was down 0.77% to 0.8886.

The Australian dollar was at four-and-a-half month lows; with AUD/USD down 0.85% to 0.7708 as surprisingly soft domestic inflation data diminished expectations for a rate hike by the country’s central bank in the coming months.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slipped 0.17% to 93.67.

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