The dollar soared to a near six-year high against the yen Friday on upbeat expectations for U.S. jobs data, while the euro sank after the European Central Bank launched a surprise round of monetary easing.
The greenback jumped to 105.69 yen in early Asian trade, its highest level since October 2008, before easing slightly to 105.32 yen. However, it is still above the 105.22 yen seen late in New York.
The euro, which fell below $1.30 for the first time since July 2013 on Thursday, bought $1.2935 and 136.23 yen, compared with $1.2945 and 136.22 yen in U.S. trade.
A raft of upbeat data for the world’s number one economy has helped boost the dollar recently, with key jobs data scheduled for later Friday.
It has also been given a lift against the yen as investors shift out of the euro after the ECB’s announcement.
The fact that the dollar soared to its highest level against the yen since the global financial crisis has a significant meaning, said Junichi Ishikawa market analyst at IG Securities.
“This will send a signal to the market that further advances in the dollar lie ahead,” Ishikawa said.
ECB policymakers on Thursday cut interest rates to 0.05 percent from 0.15 percent and the deposit rate to minus 0.2 percent from minus 0.1 percent, meaning lenders would have to pay more to keep their cash at the central bank. It also unveiled plans to purchase asset-backed securities to help kick-start lending in the region.
“The ECB over-delivered versus consensus market expectations,” National Australia Bank said in a note.
Tsuyoshi Hirota, chief manager of the forex department at Mitsubishi UFJ Trust and Banking, said some market players were “taking dollar-buying opportunities ahead of the release of the (U.S.) jobs data” Friday.
“Strong figures are expected, prompting short-term buying,” he said of the August employment data.
The U.S. economy’s upward momentum has fueled speculation the Federal Reserve will hike interest rates sooner than later, which would boost the greenback.
On Thursday, the Bank of Japan (BoJ) kept its loose monetary policy in place but held off expanding the program. It stuck by its rosy view of the world’s number three economy despite mounting evidence that an April sales tax hike has stalled growth.
The weakening economy has stoked speculation that Japan’s central bank will be forced to act to counter the downturn, putting pressure on the yen.
BoJ Governor Haruhiko Kuroda told a post-meeting news conference that the dollar’s upward moves were “nothing strange” given the divergence in U.S. and Japanese monetary policy and the relative strength of their economies.