Investing.com - The dollar was trading close to six-month highs against the yen on Tuesday after unexpectedly strong U.S. manufacturing data cemented expectations that the Federal Reserve will start to taper stimulus at one of its next few meetings.
During European morning trade, USD/JPY rose to highs of 103.37, the loftiest level since May 23 and was last up 0.16% to 103.09.
The dollar was boosted after the Institute for Supply Management said Monday that manufacturing activity in the U.S. expanded at the fastest rate since April 2011 in November, fuelling optimism over the economic recovery.
The ISM manufacturing purchasing managers’ index rose to 57.3 in November from 56.4 in October. Analysts had expected the index to fall to 55.0.
Expectations that the Bank of Japan will have to expand its stimulus program in order to meet its target of 2% inflation by 2015 continued to weigh on the yen.
Elsewhere, EUR/USD was up 0.23% to 1.3571 from 1.3540 on Monday.
The pound was trading close to 27-month highs against the dollar, with GBP/USD up 0.18% to 1.6384, near Monday’s high of 1.6441.
The U.K. was to release data on construction sector activity later in the session, after data on Monday showed that the manufacturing sector expanded at the fastest rate in 33 months in November.
The dollar slipped lower against the Swiss franc, with USD/CHF sliding 0.22% to 0.9067.
The greenback was little changed against the Australian, New Zealand and Canadian dollars, with AUD/USD dipping 0.07% to 0.9096, NZD/USD edging up 0.12% to 0.8194 and USD/CAD inching down 0.01% to 1.0640.
The Reserve Bank of Australia left rates unchanged at 2.5% on Tuesday, in a widely expected decision. The bank said the Australian dollar was still “uncomfortably high”, adding that a lower exchange rate is likely to be needed to achieve balanced growth.
The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.16% to 80.79.
During European morning trade, USD/JPY rose to highs of 103.37, the loftiest level since May 23 and was last up 0.16% to 103.09.
The dollar was boosted after the Institute for Supply Management said Monday that manufacturing activity in the U.S. expanded at the fastest rate since April 2011 in November, fuelling optimism over the economic recovery.
The ISM manufacturing purchasing managers’ index rose to 57.3 in November from 56.4 in October. Analysts had expected the index to fall to 55.0.
Expectations that the Bank of Japan will have to expand its stimulus program in order to meet its target of 2% inflation by 2015 continued to weigh on the yen.
Elsewhere, EUR/USD was up 0.23% to 1.3571 from 1.3540 on Monday.
The pound was trading close to 27-month highs against the dollar, with GBP/USD up 0.18% to 1.6384, near Monday’s high of 1.6441.
The U.K. was to release data on construction sector activity later in the session, after data on Monday showed that the manufacturing sector expanded at the fastest rate in 33 months in November.
The dollar slipped lower against the Swiss franc, with USD/CHF sliding 0.22% to 0.9067.
The greenback was little changed against the Australian, New Zealand and Canadian dollars, with AUD/USD dipping 0.07% to 0.9096, NZD/USD edging up 0.12% to 0.8194 and USD/CAD inching down 0.01% to 1.0640.
The Reserve Bank of Australia left rates unchanged at 2.5% on Tuesday, in a widely expected decision. The bank said the Australian dollar was still “uncomfortably high”, adding that a lower exchange rate is likely to be needed to achieve balanced growth.
The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.16% to 80.79.