Dollar Trades at Almost Highest Against Yen Since 2009

The dollar traded at almost the strongest since August 2009 versus the yen as signs the American economy is gaining momentum boosted demand for U.S. assets.

The Dollar Index traded at almost the highest in seven months before reports this week that economists said will show retail sales improved in February and consumer prices increased. U.S. stocks gained. Mexico’s peso rallied to its strongest level against the greenback since September 2011 after the central bank signaled its interest-rate cut last week would be a one-time reduction. The pound touched the weakest level to the dollar since June 2010.

“The dollar is still generally firmer,” Robert Lynch, a New York-based currency strategist at HSBC Holdings Plc, said in a telephone interview. “The general risk-on bias in some equity markets -- like the U.S., like Japanese equity markets -- that tends to correlate negatively with movements in the yen.”

The dollar rose 0.3 percent to 96.28 yen at 5 p.m. in New York after climbing to 96.55 on March 8, the highest level since Aug. 11, 2009. The U.S. currency fell 0.3 percent to $1.3046 per euro. The yen weakened 0.6 percent to 125.61 per euro. Sterling was little changed at $1.4915 after touching $1.4866.

Equities Gain

The Standard & Poor’s 500 Index of stocks 500 increased 0.3 percent and the Dow Jones Industrial Average, which set a record high last week, climbed 0.4 percent.

The yen will face a test at the 97-to-97.80 zone, according to Niall O’Connor, a technical analyst at JPMorgan Chase & Co. in New York.

Japan’s currency may depreciate to 100, which would be its lowest level since April 2009, if it breaches that support level, O’Connor said. Support is an area where preset orders may be triggered.

Bank of Japan governor nominee Haruhiko Kuroda said the central bank will consider buying derivatives if he’s confirmed as governor and signaled a readiness for a quick expansion in monetary stimulus.

Mexico’s peso rallied for a third day. Policy makers led by central-bank Governor Agustin Carstens said the rate cut “doesn’t represent the start of a cycle,” bolstering confidence the bank will keep rates on hold for now and reducing the likelihood looser monetary policy will erode the allure of local-currency debt for foreigners.

The peso rose 0.7 percent to 12.5402 to the dollar.

Economic Data

U.S. retail sales rose 0.5 percent in February after a 0.1 percent gain in January, according to a Bloomberg News survey before the Commerce Department data on March 13. A separate report on March 15 will show the consumer-price index climbed 0.5 percent, after being little changed in January. The jobless rate fell to a four-year low of 7.7 percent, the Labor Department said last week.

The threat of across-the-board cuts in government spending -- known as sequestration -- failed to deter households, economists said.

The Dollar Index, which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six U.S. trade partners, declined 0.2 percent to 82.569 after climbing to 82.924 on March 8, the highest since Aug. 3.

“The market has run a long way in terms of dollar strength,” Sebastien Galy, a foreign-exchange strategist in New York at Societe Generale SA, said in a telephone interview. “We’re probably mostly in a phase of consolidations, with one exception in short sterling, which still attracts as a bearish trade on Europe.”

Market Measure

The dollar has appreciated 3 percent this year, the best performer after Sweden’s krona of the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes, on speculation stronger U.S. growth will prompt the Federal Reserve to reduce the pace of bond purchases. The euro rose 1.7 percent, while the yen tumbled 8.3 percent.

Hungary’s forint slid the most since December after central-bank President Gyorgy Matolcsy stripped two of his deputies appointed under a previous government of some of their powers on March 8. He shifted responsibility to Adam Balog, a vice president appointed by Prime Minister Viktor Orban’s cabinet this month.

Investors interpreted the decision “as evidence that drastic changes in the monetary policy toolkit would be announced soon,” weakening the forint, Mariann Trippon, a Budapest-based economist at Intesa Sanpaolo SpA’s CIB unit, wrote in a research report today.

The forint slid 0.8 percent to 301.81 per euro after weakening to 303.61, the lowest since June.

The won fell to the lowest since October against the dollar after North Korea’s Committee for the Peaceful Reunification of Korea said it would target the South’s incoming defense minister. It dropped 0.4 percent to close at 1,095 per dollar after sliding to 1,102.65, the lowest since Oct. 25.