By William Watts, MarketWatch , Hiroyuki Kachi
NEW YORK (MarketWatch) -- The U.S. currency gained ground on the
yen and the euro Tuesday, cementing the strongest quarterly rise
for the ICE dollar index since a haven-inspired surge into the
greenback during the height of the financial crisis.
The index (DXY) rose 0.4% to 85.916. The index, which measures
the dollar against six major rivals, posted a 7.7% quarterly rise,
the largest since a 9.6% jump in the third quarter of 2008,
according to FactSet data.
The dollar's surge has been credited with helping to undercut
commodities, which have seen broad losses in September. A stronger
dollar makes commodities priced in the currency more expensive to
users of other currencies. See: An already ugly September for
commodities just got real.
The dollar reversed early weakness versus the Japanese yen
(USDJPY) to trade at Yen109.64 versus a level of Yen109.50 late
Monday in New York. The euro (EURUSD) fell to $1.2631 from $1.2685,
slipping as data showed annual euro-zone inflation fell to 0.3%, a
five-year low.
"The latest inflation data suggests that price pressures in the
region are non-existent as demand remains tepid and fears of
disinflation begin to take hold. The figures are likely to put
further pressure on [the European Central Bank] to begin an
aggressive easing program in order to stimulate demand," said Boris
Schlossberg, managing director of FX strategy at BK Asset
Management.
ECB policy makers meet on Thursday.
The currency market processed the last flows related to the
settlement of commercial transactions by Japanese companies at the
end of the fiscal first half earlier in the session.
Market participants might be set to wait in the wings ahead of
the ECB meeting and U.S. manufacturing and jobs data later in the
week. Market participants shrugged off disappointing Japanese
economic data such as industrial production release in the morning
as lacking in relative importance.
A move by the dollar to toward the Yen110 threshold will have to
wait until later this week, as investors will find it "difficult to
make major, positive moves" ahead of the U.S. data, said Mizuho
Securities chief FX strategist Kengo Suzuki.
"While YenY110 seems close, the path there is still distant,"
Suzuki said.
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