© Reuters. FILE PHOTO: U.S. dollar notes are seen in this picture illustration
By Shinichi Saoshiro
TOKYO (Reuters) – The dollar neared a 1-1/2-month high against the yen on Friday, as an improvement in investor risk appetite buoyed equities and pushed U.S. yields significantly higher.
The dollar was steady at 107.385 yen
Equities were boosted as Wall Street gained on Thursday in anticipation of strong corporate earnings, and as geopolitical worries eased on U.S. President Donald Trump’s suggestion that a military strike on Syria may not be imminent.
The dollar had slipped against the yen, a perceived safe-haven, earlier in the week as U.S.-China trade tensions and the possibility of a U.S.-led missile strike on Syria roiled the broader financial markets.
“Some of the moves driven by risk aversion that lifted the yen are being unwound. But while risks facing the market may have softened, they have not gone away,” said Shin Kadota, senior strategist at Barclays (LON:) in Tokyo.
For now the U.S. currency was supported by higher Treasury yields, with that of the 10-year () surging 5 basis points overnight to its highest since late March.
“The dollar had not shown a strong correlation with U.S. yields recently. But the correlation returned somewhat, with currencies taking notice of such a spike in yields,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.
“Risk aversion in equities will need to keep receding for the dollar to remain supported. There is no change to the equation of ‘Trump risk’ dictating market direction.”
The against a basket of six major currencies was a shade higher at 89.778 (). It rose 0.2 percent the previous day, ending a four-day losing streak.
The euro was little changed at $1.2328 () after losing 0.3 percent the previous day, when it ended a four-day winning run.
The common currency has risen 0.4 percent this week, supported by comments from European Central bank officials that reinforced expectations toward monetary policy normalization.
The Swiss franc, a perceived safe haven currency, was little changed at 0.9534 per dollar
The Australian dollar, sensitive to shifts in risk sentiment, rose 0.3 percent to $0.7777
The Singapore dollar
The Monetary Authority of Singapore said the economy should remain on a steady expansion path in 2018.
The Hong Kong dollar
The currency reached the limit of its trading band due to a steadily widening U.S.-Hong Kong interest rate gap. It was HKMA’s first intervention to defend the lower end of the barrier since the trading band was introduced in 2005.