The dollar advanced to the highest level in five months versus the yen as forecasts for stronger U.S. economic data added to the momentum triggered by Donald Trump’s victory in the presidential election.The U.S. currency extended gains, reaching its strongest level in 2016 against the euro, after Federal Reserve Bank of St. Louis President James Bullard said the economy could get a medium-term boost from Trump’s policies.The greenback has been buoyed since the Nov. 8 vote by speculation the president-elect’s proposals to increase spending and cut taxes will boost growth and inflation, nudging the central bank toward raising interest rates.Stronger-than-expected retail sales Tuesday helped drive the market-implied probability of a rate increase in December to 94 percent. Some analysts warned that further increases in the dollar may be limited before Fed Chair Janet Yellen’s testimony Thursday, coming as Trump continues to form his administration.“The medium-term outlook for the dollar is still solid, and we expect it to strengthen well into the first quarter of next year,” said Ned Rumpeltin, the European head of currency strategy at Toronto Dominion Bank in London.“But some in the market might adopt a cautious near-term stance ahead of the testimony and during the shaping of the new administration.”The U.S. currency climbed 0.5 percent to 109.70 yen as of 7:10 a.m. New York time. The greenback rose as high as 109.76, the most since June, and appreciated 0.3 percent to $1.0692 per euro. Earlier it touched $1.0688, the strongest level of 2016 against the single currency.
Source: Today
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