Investing.com - The dollar rose to fresh six year peaks against the yen on Wednesday, and remained close to two year highs against the euro amid expectations that the Federal Reserve is on course to tighten monetary policy ahead of its peers in Japan and Europe.
USD/JPY hit highs of 110.09, the most since August 2008, before retracing some of those gains to trade at 109.80, 0.16% higher for the day.
In Japan, data on Wednesday showed that the Bank of Japan’s Tankan business confidence index ticked higher in September, but sentiment in the country’s service sector deteriorated.
The report came a day after data showed that industrial output, consumer spending and salaries all fell in August.
The weak data highlighted the diverging monetary policy stance between the Federal Reserve and the BoJ.
The dollar has rallied against the yen and the euro in recent months, amid expectations that the Federal Reserve is growing closer to raising interest rates.
The dollar shrugged off data on Tuesday showed that U.S. consumer confidence fell in September and another report showing that house prices rose less-than-expected in July.
Investors were looking ahead to Friday’s nonfarm payrolls report amid expectations that it would show the U.S. economy added more than 200,000 jobs for a sixth successive month in August.
EUR/USD was at 1.2622, not far from Tuesday’s two year trough of 1.2570.
The euro weakened after data on Tuesday showed that the annual rate of euro area inflation fell to a five year low of 0.3% in September.
The European Central Bank targets an inflation rate of close to but just below 2%.
The weak inflation data added to pressure on the ECB to implement additional stimulus measures to stave off the threat of deflation in the region, ahead of its monthly meeting on Thursday.
The ECB unexpectedly cut rates to record lows last month in a bid to shore up growth in the region.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was last at 86.07, close to Tuesday’s peaks of 86.34, a high last seen in June 2010.