The dollar headed for a seventh straight gain against the yen, its longest streak since October, as speculation grew that the Federal Reserve has a stronger case for raising interest rates. The weakness in the yen sent Japanese shares higher, while oil advanced for the first time in three sessions.
The U.S. currency extended gains after the Bloomberg Dollar Spot Index capped its biggest weekly advance since November. Data on Friday showed the American economy expanded more than previously estimated, adding to evidence that the central bank may raise rates as early as next month. Chinese equities erased earlier gains that had been spurred by a jump in industrial companies’ profits. Trading volumes were light, with many financial markets across Asia and Europe shut following holidays on Friday.
“We’re now more conscious that there’s strength in the U.S. economy,” said Yoshinori Ogawa, a market strategist at Okasan Securities Co. “There were some views that the U.S. won’t be able to raise rates on economic concern, so the weakening dollar should take a break.”
Investors are weighing whether the U.S. economy is strong enough to withstand another rate increase. Asian stocks fell last week for the first time in a month and a half as Fed officials talked up the possibility of higher borrowing costs, comments that helped spur demand for the dollar. Investors will be watching China manufacturing figures on Friday as well as U.S. non-farm payrolls for a better idea of the strength of growth in the world’s two biggest economies.
The yen slipped 0.4 percent against the dollar as of 3:18 p.m. in Tokyo. Japan’s Topix rallied late in the day after briefly erasing losses. Gold futures lost 0.5 percent, trading near a one-month low. West Texas Intermediate crude was up 1.3 percent after the number of active rigs fell in the U.S., potentially easing a supply glut.
“The dollar does have some legs,” Jason Schenker, president and chief economist of Prestige Economics LLC, said in a Bloomberg TV interview. “It is all about Fed expectations. The fact that they did not move in March, but now it looks like they could move in April, that’s going to be what everyone is watching for this week. And that does have the potential to keep the dollar now only supported, but to send it higher in the week ahead.”