Early trade in New York: dollar surges to 8-1/2-month high against yen

The US dollar hit its highest level against the yen in 8-1/2 months on Wednesday and also surged against the euro and Swiss franc after a surge in oil prices pushed US Treasury yields higher, while strong private payrolls data bolstered expectations for a hawkish Federal Reserve next year.
The dollar rose about 1.7 percent against the yen to 114.43 yen, its highest level since early March. The euro fell about 0.8 percent against the dollar to a session low of $1.0554 after US crude prices rallied more than 8.5 percent as some of the world's largest oil producers agreed to curb oil output for the first time since 2008.
The dollar was last on track to gain about 9 percent against the yen in November to mark its strongest monthly performance since August 1995. The dollar also hit a roughly 10-month high against the Swiss franc of 1.0204 francs. The gains in oil prices boosted views of higher inflation, which in turn sent US Treasury yields higher given the negative impact of inflation on bond prices. The higher Treasury yields fueled demand for the dollar relative to currencies such as the euro and yen, whose government bond yields are still low-to-negative.
"It's the widening of interest rate differentials," said Alvise Marino, FX strategist at Credit Suisse in New York, in reference to the dollar's gains on the back of higher Treasury yields. The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.8 percent at 101.690.