U.S. Dollar rises to upper 100 yen on expectations for earlier Fed tapering

Tokyo-Japan (Nov 21)   The U.S. dollar climbed to the upper 100 yen range in Tokyo on Thursday amid expectations the Federal Reserve will begin to reduce its ultraeasy monetary policy in the next few months and a rise in U.S. Treasury yields.

At 5 p.m. , the dollar fetched 100.72-73 yen compared with 99.98-100.08 yen in New York and 99.98-100.00 yen in Tokyo at 5 p.m. Wednesday . During the day, it moved between 100.02 yen and 100.85 yen , a four-month high. The U.S. unit changed hands most frequently at 100.45 yen .

The euro was quoted at $1.3408-3409 and 135.05-09 yen against $1.3434-3444 and 134.35-45 yen in New York and $1.3533-3535 and 135.31-35 yen in Tokyo late Wednesday afternoon.

"The U.S. currency was bought against major currencies, including the yen, due to expectations that the U.S. Federal Reserve's tapering of its massive asset purchases will take place earlier than expected," said Yuzo Sakai , manager of foreign exchange business promotion at Tokyo Forex & Ueda Harlow .

Some members of the U.S. central bank's Federal Open Market Committee believe that the scale of quantitative easing could be reduced at the next few policy meetings, according to the minutes of the Fed's Oct. 29-30 policy meeting released Wednesday.

"A rise in U.S. long-term bond yields overnight after the release of the FOMC minutes made it easier for the dollar to rise," said Yuji Kameoka , chief foreign exchange strategist at Daiwa Securities Co.

Dollar buying was also fueled by a sharp rise in Tokyo stocks, dealers said.

In morning trading, however, the dollar's upside was capped by the release of weaker-than-expected Chinese economic data.

"The weaker Chinese manufacturing data for November, released in the morning, pressured the dollar somewhat as it dented risk appetite among market participants," Sakai added.

The preliminary reading of the HSBC Purchasing Managers' Index for November stood at 50.4, down from 50.9 in the previous month.

The Bank of Japan decided earlier in the day to maintain its ultraeasy monetary policy and left unchanged its assessment of the domestic economy, but the market's reaction was limited.