TOKYO: The dollar hit a fresh 11-month high against the yen and a one-month peak against the euro in Asia on Thursday, supported by growing optimism on the US economic recovery and subsequent rises in US bond yields.
The dollar's strength came as other currencies suffer their own problems, with the euro shackled by worries over debt, the yen hampered by speculation of more easing by the Bank of Japan and the Aussie dollar hurt by worries about growth in China.
"Don't think of this as risk-on bets on the global economy. The market has just reviewed its view on the US economy, scaling back expectations of QE3 by the Fed or the view that the US economy will be doing poorly this year," Makoto Noji, senior strategist at SMBC Nikko Securities.
The US unit gained against all other currencies, with its index against a basket of major currencies hitting its highest in two months at 80.738. It last stood at 80.62.
"The US recovery is starting to gain some traction," said Annette Beacher, head of Asia Pacific research at TD Securities in Singapore.
Hot on the heels of last week's encouraging US jobs report, a strong 1.1 percent rise in retail sales provided fresh evidence of an upturn in the world's largest economy.
Acknowledging this trend, the US Federal Reserve Bank slightly upgraded its outlook, expecting "moderate" growth over coming quarters and a gradual decline in the unemployment rate. "All the dots are lining up for US data at the moment and markets still digesting the fact that (Fed Chief) Bernanke has dropped the word 'strain' in terms of financial markets (in his last statement)," said Beacher.
This has led the markets to lower their expectations of further quantitative easing and given a boost to the dollar.
The two-year Treasury note yield hit its highest since July , lessening the attraction of using the dollar to fund carry trades and pushing the yen to lows not seen since April.
The dollar rose to as high as 84.187 yen before stabilising at around 84.01 yen, up 0.35 percent on the day after having risen nearly 1 percent the previous day.
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