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Dollar climbs to ¥123.40 on expectations of Fed rate hike


The dollar was firmer around ¥123.40 in Tokyo trading late Thursday, lifted by a rise in Tokyo stock prices and growing expectations for an interest rate increase in the United States.

At 5 p.m., the dollar stood at ¥123.37-38, up from ¥123.05-06 at the same time Wednesday. The euro was at $1.0586-0586, down from $1.0625-0626, and at ¥130.61-62, down from ¥130.75-77.

The dollar was solid around ¥123.20 in early trading, carrying over its strength from overnight trading overseas, where the greenback drew buying thanks to a favorable reading in Automatic Data Processing Inc.’s U.S. employment report for November.

Following the stronger-than-expected ADP employment report, “expectations grew among market players for (strong numbers) in the U.S. government’s closely watched jobs data (for November), due out tomorrow,” an official at a foreign exchange margin trading service firm said.

“An interest rate hike by the end of this year now looks certain,” an economist at a foreign exchange brokerage house said.

The dollar was also aided by speeches by Federal Reserve Bank of Atlanta President Dennis Lockhart and Federal Reserve Chair Janet Yellen on Wednesday, in which they suggested the Fed’s readiness to raise interest rates, market sources said.

In late hours, the dollar rose to near ¥123.50 after Tokyo stocks erased early losses and closed higher.

The dollar failed to extend gains as players retreated to the sidelines before the European Central Bank’s policy-setting meeting later on Thursday, market sources said.