Dollar Rises Seventh Day Versus Yen on Outlook for Higher Rates

Is Dollar Strength Sustainable Going Forward?

The dollar rose for a seventh day against the yen, the longest winning streak since October, before U.S. economic data this week that may add to speculation the economy is strong enough to handle higher interest rates.

The greenback gained as a report showed U.S. personal spending on goods and services climbed 0.1 percent for a third month in February, Commerce Department figures indicated Monday. Traders will be watching a speech by Federal Reserve Chair Janet Yellen Tuesday for clues about the central bank’s rate path, followed by monthly labor data later in the week.

"The inflation numbers today give her a little bit of breathing space," said Richard Franulovich, chief currency strategist for the northern hemisphere at Westpac Banking Corp. in New York. "If we get a decent payrolls on Friday that’ll probably boost April odds" for a Fed rate increase, and support the currency before officials’ meeting next month, he said.

The dollar climbed 0.3 percent to 113.36 yen as of 9:02 a.m. in New York on Monday, extending its advance in the past seven days to 1.6 percent. The U.S. currency was little changed at $1.1184 per euro. The yen weakened 0.4 percent to 126.78 per euro.

Easter Holiday

Financial markets including those of the U.K, Germany, Australia, and New Zealand were shut Monday for the Easter holiday. Trading will take place as normal in the U.S.

U.S. employers probably added 210,000 workers in March, after hiring 242,000 the previous month, according to a Bloomberg survey before the Labor Department releases the figure April 1.

“Expectations for solid U.S. economic data this week are lifting the dollar,” said Koji Fukaya, chief executive officer at FPG Securities Co. in Tokyo. “It’s hard to find a reason to sell dollars. Concerns over the U.S. economy, China, oil, which had fueled risk aversion, are subsiding to underpin the dollar and weigh on the yen.”

Speculators and hedge funds trimmed net bets for a third week that the U.S. currency will strengthen against eight of its major peers, according to data from the Commodity Futures Trading Commission.

Fed Speakers

Fed Bank of San Francisco President John Williams, who doesn’t vote on monetary policy this year, said Monday that the global economy, particularly China and Brazil, was having a significant impact on measures that U.S. policy makers watch to determine interest rates.

On March 23, Fed Bank of St. Louis President James Bullard said U.S. policy makers should consider raising rates in April. Fed Bank of Philadelphia President Patrick Harker said last week the U.S. economy is resilient, and he’d support a quarter-point increase if that continues.

“It’s all about Fed expectations,” Jason Schenker, president and chief economist of Prestige Economics LLC, said in an interview on Bloomberg Television. “The fact that they did not move in March, but now it looks like they could move in April, that’s going to be what everyone is watching for this week. And that does have the potential to keep the dollar not only supported, but to send it higher in the week ahead.”

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