Investing.com - The dollar rose to fresh 12-and-a-half year highs against the yen on Tuesday as upbeat data on U.S. manufacturing activity and construction spending bolstered expectations for higher interest rates.
USD/JPY hit highs of 125.06, the most since November 2002 before pulling back to 124.61.
The dollar was boosted after data on Monday showed that the Institute of Supply Management’s manufacturing index accelerated in May, as new orders and employment both rebounded.
The ISM index of manufacturing activity was 52.8, up from 51.5 in April and ahead of forecasts for 52.0.
Another report showed that U.S. construction spending rose to the highest level in six-and-a-half years in April, adding to recent signs that the economy is rebounding from a weak first quarter.
The Commerce Department said construction spending jumped 2.2% to an annual rate of $1.0 trillion, the highest since November 2008.
The greenback shrugged off data earlier in the day showing that U.S. consumer spending was unexpectedly flat in April.
The yen showed little reaction after Bank of Japan Governor Haruhiko Kuroda said Tuesday that it was important for currencies to reflect economic fundamentals.
The euro edged higher against the dollar, with EUR/USD up 0.21% to 1.0948, off overnight lows of 1.0886.
Late Monday Greece’s creditors said there must be “intensive work” in the coming days to reach an agreement on economic reforms needed to unlock further financial aid.
Greece is due to make a €305 million payment to the International Monetary Fund on Friday but warned last month that it will be unable to make the repayment if a cash-for-reforms deal is not reached by then.
Elsewhere the euro was near two-week highs against the yen, with EUR/JPY at 136.46.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, eased to 97.34, not far from the five week highs of 97.88 hit last Wednesday.