Dollar Records Best Monthly Advance against Yen in Seven Years

Market - Himanshu Gill - Dec 01,2016

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dollar records best monthly advance against yen in seven years

The dollar showed steady pace as it gained its best month against the yen since 2009; U.S. economy is showing signs of an upward scream since Donald Trump’s presidential victory.

The dollar hit its highest level of almost 14 years last week against all major currencies. This boost from Donald Trump's US election win has shocked the world and  drove debt yields higher on expectations of more fiscal spending, higher inflation and a faster pace of monetary tightening.

The US dollar has surged by almost 8 per cent against the yen since the start of this November; its strongest month since December 2009, and more than 3 per cent against the euro. Hedge funds and other large speculators have boosted bullish dollar’s value to the highest since February, according to Commodity Futures Trading Commission data. A report was released on Tuesday, showing that the U.S. economy expanded more than it was expected in the last quarter which added to the bullish backdrop.

The dollar appeared to somewhat stall at the beginning of this week trading below last week’s peak figures, but it soon went up by 0.2 percent on Wednesday. Economists expect a further appreciation in the dollar’s index, especially against the yen and yuan.

The dollar is anticipated to move upwards to 115 yen by the end of the first quarter of 2017 and 128 yen at the end of 2017. Japanese currency yen has also been pushed down by the Bank of Japan’s decision to implement a new monitory policy tool.

However, some analysts also said that dollar gains may get halted in the small run, following the meeting of OPEC (Organization of the Petroleum Exporting Countries) that could spark volatility in the market.