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Dollar Touches 11-Month High Against Yen on U.S. Recovery

By Monami Yui

The dollar rose to an 11-month high against the yen before U.S. data today forecast to show regional manufacturing expanded and initial jobless claims decreased, adding to signs the American economy is gathering momentum.

The greenback was near the highest level in four weeks against the euro amid reduced bets the Federal Reserve will begin a third round of bond purchases, or quantitative easing, which could debase the world’s reserve currency. The Australian dollar remained weaker before the Reserve Bank of Australia releases its quarterly bulletin today. Norway’s krone was close to a one-month low after the central bank unexpectedly lowered interest rates yesterday.

“We’re seeing a shift in trend to dollar buying across the board,” said Junichi Ishikawa, an analyst in Tokyo at IG Markets Securities Ltd. “Should U.S. economic data continue to come in firm, it will support the market’s view that the Fed doesn’t need QE3.”

The dollar touched 83.89 yen, the highest level since April 14 and traded 0.2 percent higher at 83.88 yen as of 8:45 a.m. in Tokyo. The U.S. currency was little changed at $1.3026 per euro, after it climbed to $1.3011 yesterday, the strongest since Feb. 16. The yen fetched 109.27 per euro from 109.12.

Australia’s dollar fell 0.1 percent to $1.0440, following a 1 percent drop yesterday.

U.S. Manufacturing
The Federal Reserve Bank of New York’s general economic index slid to 17.5 this month from 19.5 in February, according to the median survey of economists in a Bloomberg News survey. Readings greater than zero signal expansion in the so-called Empire State Index, which covers New York, northern New Jersey, and southern Connecticut. A gauge of manufacturing in the Philadelphia region increased to 12 in March, the highest since April, another poll shows. Both Fed reports are due today.

The Labor Department may say today the number of Americans applying for jobless benefits fell by 5,000 to 357,000 in the week ended March 10, according to economists surveyed by Bloomberg News.

The Federal Open Market Committee said March 13 it expects “moderate economic growth” and predicted the U.S. unemployment rate “will decline gradually.”

The krone fell yesterday after Norway’s central bank reduced interest rates 0.25 percentage point to 1.5 percent and said the stronger currency was damping growth in the nation, inciting the cut. Norges Bank had been forecast leave its benchmark rate at 1.75 percent, according to 14 of 16 economists surveyed by Bloomberg.

The Norwegian currency was little changed at 5.8263 per dollar, after touching 5.8352 yesterday, the lowest since Feb. 6.

Dollar Touches 11-Month High Against Yen on U.S. Recovery

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