Investing.com - The dollar rose to its highest level in six years against the yen on Tuesday, while the euro slid to fresh 14-month lows as expectations for higher U.S. interest rates continued to bolster the greenback.
USD/JPY touched highs of 106.34, the highest level since October 2008, and was up 0.20% to 106.22.
The dollar was boosted after a study by the San Francisco Federal Reserve published on Monday indicated that Fed officials see rates rising earlier than markets expect.
The dollar has rallied in recent weeks amid expectations that the Fed may announce a rate increase earlier than expected after economic data indicated that the recovery in the U.S. is progressing strongly.
The dollar’s rally paused on Friday after the latest U.S. employment report showed that the rate of jobs growth slowed in August, before shrugging off the data and resuming its run higher.
The Fed is expected to wind up its asset purchase program in October and to start raising interest rates sometime in mid-2015. In contrast, the European and Japanese central banks look likely to stick to a looser monetary policy stance.
The yen remained under pressure after data on Monday showing that Japan’s second quarter economic contraction was larger than initially estimated, and another report showing that the country’s current account surplus fell short of expectations in July.
The weak data raised expectations for further easing measures from the Bank of Japan to stimulate the economy.
The euro fell to fresh 14-month lows against the dollar, with EUR/USD touching lows of 1.2867, the weakest since July 2013.
The euro weakened across the board after the European Central Bank cut rates to record lows across the euro zone last week and unveiled new measures in a bid to shore up the faltering recovery and boost inflation.
Meanwhile, the pound was trading at 10 month lows against the dollar as concerns over the prospect of Scottish independence continued to pressure the currency lower.
GBP/USD touched lows of 1.6064 and was last at 1.6091, down 0.07% for the day.
Investor confidence was hit by uncertainty over what currency an independent Scotland would use, as well as concerns over how much of the U.K. national debt it would take on.