US dollar surges, tops 100 yen first time in 4 years

(AFP/Kazuhiro Nogi)

NEW YORK: The US dollar surged on Thursday against major currencies, topping the 100-yen level for the first time in four years, helped by new jobs data adding to confidence in the US economy.

The US dollar jumped to 100.55 yen at 2100 GMT, up from 99.01 late Wednesday, in a long-expected move above the 100 threshold as the Bank of Japan pumps out more liquidity to wrench the Japanese economy from a deflationary hole.

The US dollar has gained more than 30 per cent on the yen since it bottomed out at 77 yen late last September.

Meanwhile the US dollar gained more than one cent on the euro: at 2100 GMT the euro was at US$1.3044, compared to US$1.3156 on Wednesday.

The US dollar got support from a swing back to moderate bullishness on the US economy. US initial jobless claims, a sign of the pace of layoffs, fell to a seasonally adjusted 323,000 last week, their lowest level since mid-January 2008, the Labor Department reported.

Such data translates into higher expectations that the Federal Reserve will likely begin tightening monetary policy this year rather than in 2014, analysts said, boosting the greenback's prospects.

The US dollar's rise has been coming "because the US soft patch has looked increasingly like a temporary soft patch," said Kit Juckes of Societe Generale.

"US eco-optimism begets thoughts of earlier Fed tapering to replace yesterday's thoughts of later tapering.... The forex reaction will be a stronger dollar. Doesn't have to be today, but (it) will come."

David Song, currency analyst at DailyFX, said the Bank of Japan's aggressive stimulus program could also further soften the yen.

"The low-yielding currency may weaken further ahead of the next Bank of Japan interest rate decision on May 22 as the central bank adopts a more aggressive approach to stem deflation," he said.

The British pound was lower at US$1.5451, down from US$1.5536 late Wednesday, while the US dollar rose to 0.9479 Swiss franc from 0.9352 franc.