The dollar hit a fresh 29-month high above ¥88 in Tokyo on Friday, the first trading day of 2013 in Japan, on the back of speculation that the U.S. Federal Reserve may end its quantitative easing program at an early date.
At 5 p.m., the dollar was quoted at ¥88.07-08, up from ¥86.30-31 at the same time Dec. 28, the final trading day of last year. The euro was at $1.3006-3009, down from $1.3249-3253, and at ¥114.56-59, up from ¥114.36-38.
Carrying over its firm tone in overseas trading around the turn of the year, the U.S. currency climbed above ¥88 for the first time since July 28, 2010, in late trading.
The dollar attracted purchases as minutes of the Fed’s policy-setting meeting in December diminished speculation about the continuation of the bank’s monetary easing measures, and gave a boost to U.S. Treasury yields. The minutes of the Dec. 11-12 meeting, released Thursday, showed that several policymakers believed it would be appropriate to slow or stop bond purchases under the Fed’s quantitative easing program “well before the end of 2013.”
Meanwhile, the passage by the U.S. Congress earlier this week of legislation designed to avoid the “fiscal cliff” eased concern over the adverse impact of a fiscal crisis on the world’s largest economy, traders said.
The greenback was also supported by expectations for favorable readings in the U.S. Labor Department’s employment report for December, due out later Friday.
“Expectations are high for an improvement in the upcoming data in the wake of (Automatic Data Processing Inc.’s) strong jobs report,” said an official of a foreign-exchange margin-trading service provider.