Dollar Rises on U.S. Rate Speculation

• Dollar Rises on U.S. Rate Speculation

The dollar climbed for a seventh day against the yen and held near a two-week high versus its major peers as economic data and comments from Federal Reserve officials revived speculation about an interest-rate increase in 2016.

The U.S. currency posted its longest winning streak versus its Japanese counterpart since March. Key jobs numbers at the end of this week are forecast to show a pickup in hiring in the world’s largest economy, while Fed Bank of Chicago President Charles Evans told reporters in Auckland today that one rate increase by year-end is likely if data continue to improve.

An index of the U.S. currency jumped the most since mid-September on Tuesday after fellow official Jeffrey Lacker urged the central bank to tighten policy to stem a likely uptick in inflation.

“The dollar remains supported by expectations of a Fed rate hike,” said Viraj Patel, a London-based foreign-exchange strategist at ING Groep NV. “Fed talk has been relentlessly hawkish in the past couple of weeks, so much so it’s been hard for markets to ignore. Markets are now looking for the data to validate this.”

The yen slipped 0.2 percent to 103.12 per dollar as of 6:40 a.m. New York time in its seventh day of losses, while the euro rose 0.2 percent to $1.1224.

The Bloomberg Dollar Spot Index, which measures the currency against 10 major peers, was little changed as of 10:35 a.m. in London, a day after it climbed 0.6 percent to the highest on a closing basis since Sept. 20.

‘Compelling’ Case

Evans, who’s not a voting member on the Federal Open Market Committee until next year, said the U.S. central bank may raise the benchmark interest rate as soon as next month. Fed Bank of Cleveland President Loretta Mester said Monday that the case for an increase is “compelling.”

Traders will get more clues on the likely path of U.S. rates later in the day when reports on employment, manufacturing and services are released. The probability of a hike by December rose to 61 percent, from 51 percent at the start of last week.

“Those who had become doubtful of a rate increase this year are now paring their bearish view somewhat,” said Takao Hattori, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo.

“It seems clear the Fed wants to lift rates before the end of this year.”