US Dollar Reaches Strongest Level in 6 Weeks Against Japanese Yen

The US Dollar touched its highest level against the yen in three weeks on Thursday, as the greenback headed for a fourth consecutive day of gains against the Japanese currency. The US dollar remained supported today by strong private sector employment data on Wednesday.

Following yesterday’s report from the ADP Research Institute, investors expect upcoming nonfarm payroll data, which will be released on Friday, to reflect a positive image of the US labor market. Anticipation for the upcoming report is high, as strong employment data will improve the case for the Federal Reserve to raise its interest rates.

The Federal Open Market Committee meets for two days starting March 14, and investors see an 88.6% chance that the committee will decide to raise interest rates during the meeting, according to the CME Group Fedwatch tool. The high probability, which nears certainty, is supported by statements and comments from Federal Reserve officials last week that signaled that policymakers are ready to increase the Federal funds rate.

New York and San Francisco Federal Reserve Presidents William Dudley and John Williams, as well as Federal Reserve Chairwoman Janet Yellen, said that they believe an interest rate hike in March would be appropriate. Meanwhile in Europe, the European Central Bank kept its monetary policy unchanged today, which supports the US dollar as European and US monetary policies take different roads.

USD/JPY traded at 114.88 as of 16:05 GMT on Thursday, from 114.89 at 15:05 GMT, the pair’s highest level since January 27. USD/JPY started the day at 114.44. Meanwhile, EUR/USD was at 1.0570, from 1.0540 at the beginning of trading today.

The Dollar Index, which measures the strength of the US currency against a basket of its major peers, was at 102.04 as of 16:07 GMT, from 102.07 on Wednesday.

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