The dollar rose to a four-week high against the yen after Treasury
Secretary Henry Paulson voiced support for the currency and the Federal
Reserve Bank of Philadelphia president said interest rates should be
raised.
The greenback also climbed to two-week highs versus the euro and the
Swiss franc as Paulson said he expects Congress to approve a rescue
plan for Fannie Mae and Freddie Mac, the two biggest U.S.
mortgage-finance companies. The yen fell to a record low against the
euro as stocks climbed, encouraging investors to add to holdings of
higher-yielding assets funded in the Japanese currency.
``The view that the worst of the uncertainty and bad news may be behind
us has reinvigorated risk appetite,'' said Derek Halpenny, head of
currency research in London at Bank of Tokyo- Mitsubishi. ``We're on
the last leg of the dollar bear market.''
Futures traded on the Chicago Board of Trade showed yesterday a 49% chance the Fed will increase its 2% target rate for overnight lending between banks by at least a quarter-percentage point by Sept. 16, up from 23% odds a week earlier. Policy makers next meet Aug. 5.
EUR/USD failed to break above $1.5800 before sliding to $1.5715. Bids $1.5720/10, $1.5680, offers $1.5750.
GBP/USDThe 7-1-1 BOE MPC split gave rate a boost, taking it from $1.9915 to $1.9950. After CBI demand bounced it above $2.0020.
USD/JPY rose from Y107.15 to Y107.90. Offers Y107.90/00, Y108.40/60, bids Y107.50.
There are no key economic data from US today, except weekly crude oil inventories at 14:35 GMT and Beige Book at 18:00 GMT.
NZRB will announce its rate decision at 21:00 GMT with rate currently at 8.25%.