Tokyo, May 31, 2016 (AFP) –
The dollar edged higher against the yen and euro Tuesday as traders weighed the impact of a likely US interest rate hike, while Australia’s currency jumped after upbeat trade data boosted hopes for the economy.
The greenback has won support from Federal Reserve Chair Janet Yellen’s remarks last week that the US could raise interest rates “in the coming months” if economic data support it.
Traders saw this as a vote of confidence in the world’s top economy, which has been resilient even after the Fed raised rates for the first time in almost a decade in December.
The prospect of an imminent US rate hike — traders now believe one is more likely than not in July — has pushed the dollar to its best monthly performance since September 2014.
On Tuesday, it edged up to 111.15 yen from 111.13 yen Monday in Paris.
The euro slipped to $1.1135 from $1.1139 in European trade, while it was flat at 123.79 yen.
Wall Street was closed on Monday for a bank holiday.
“US policy normalisation and its likely impact has remained a key theme for markets,”Mark Smith , an Auckland-based senior economist at ANZ Bank New Zealand, said in a commentary.
“At some stage the Fed will choose which course of action it will take, and trust that the economy — and financial markets — are resilient enough to bear it.”
Elsewhere, the Australian dollar jumped after a government report showed exports boosted the economy more than expected in the first quarter.
The Aussie rose 0.9 percent to 72.49 US cents, as Australia’s statistics bureau said net exports contributed a forecast-beating 1.1 percentage points to gross domestic product.