Dollar Reached its Highest Level Against the Yen

The dollar rose for a fifth straight day against the yen on Tuesday. As a result, the greenback reached its highest level against the yen in five years as investors anticipated the omicron variant would not derail the global economy or delay the Federal Reserve’s expected rate hikes.

The U.S. Food and Drug Administration authorized the use of a third dose of Pfizer’s Covid-19 vaccine for children ages 12 to 15. It also narrowed the interval for booster shot eligibility to five months from six. 

Investors regard omicron as potentially less disruptive to the global economy than previous variants. 

Asia’s factory activity grew in the last month of 2021 as companies withstood rising global cases of the omicron variant. But persistent supply constraints and rising input costs clouded the outlook for some economies. 

A rise in U.S. Treasury yields on expectations for a Fed rate hike in 2022 supported the dollar. Yields on U.S. 2-year notes along with 5-year notes were both higher on Tuesday. Besides, the 5-year yield reached its highest level since February 2020.

Dollar, yen, and pound

The dollar index, which tracks the greenback against a basket of currencies gained 0.009%.

It pared gains after economic data from the Institute for Supply Management (ISM) released data. It said its index of national factory activity declined to a reading of 58.7 last month, below the 60.0 estimate. ISM’s index of national factory activity declined to the lowest point since last January. 

The euro added 0.03% to $1.1297.

The Japanese yen fell 0.76% versus the U.S. currency at 116.20 per dollar, after the dollar reached a high of 116.34 against the yen, its highest level since January 11, 2017. 

The British pound stood at $1.3539.