TOKYO, September 5 – The dollar soared to a near six year high against the yen Friday on upbeat expectations for US 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 the depths of the global financial crisis in October 2008 — before easing slightly to 105.33 yen. However, it was still above the 105.22 yen seen in New York.
The euro, which fell below $1.30 for the first time since July 2013 on Thursday, bought $1.2931 compared with $1.2945 in US trade while it was unchanged at 136.22 yen.
Upbeat data for the world’s number one economy have helped boost the dollar recently, with key jobs numbers scheduled for later Friday.
The US currency has also been given a lift against the yen as investors shift out of the euro after the ECB’s announcement.
The dollar’s rebound to crisis era levels is psychologically significant, 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 eurozone 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 will now 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, which is dogged by the threat of deflation.
“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 (US) jobs data” Friday.
“Strong figures are expected, prompting short-term buying,” he said of the August employment data.
The US economy’s upward momentum has fuelled 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 programme. It stuck to its rosy view of the world’s number three economy despite mounting evidence that an April sales tax hike has stalled growth.
The dollar was mostly higher against other Asia-Pacific currencies.
It strengthened to Sg$1.2558 from Sg$1.2518 on Thursday, to 32.11 Thai baht from 32.03 baht, to 1,025.25 South Korean won from 1,018.75 won, and to 43.66 Philippine pesos from 43.57 pesos.
The dollar also rose to Tw$29.94 from Tw$29.90 and to 60.43 Indian rupees from 60.42 rupees, while it edged down to 11,765.00 Indonesian rupiah from 11,766.30 rupiah.
The Australian dollar inched up to 93.41 US cents from 93.38 cents while the Chinese yuan rose to 17.12 yen from 17.09 yen.
— Dow Jones Newswires contributed to this article —