Euro hits new high versus yen

Story link: Euro hits new high versus yen

At midday in New York on Tuesday, the Canadian dollar had added 0.8 percent in relation to the US dollar to trade at C$1.0715 to the greenback, its highest level in 29 years. While the Bank of Canada held interest rates there at 4.25 percent, the statement that accompanied the announcement of the decision included language that analysts interpreted as indicating a 25 basis-point raise in rates is likely in July. The remarks included references to the strength of the Canadian currency and said that inflation might require rate increases.

The euro was also stronger on the day on expectations that the European Central Bank will not hesitate to raise interest rates to keep inflation in line, based on comments from Bundesbank president and ECB council member Axel Weber. The shared currency rose to a new record high against the Japanese yen at ¥164.33, while it gained 0.3 percent versus both the US dollar and sterling, to $1.3496 and £0.6802 respectively.

After an unexpected fall in Japan’s unemployment rate which triggered speculation that interest rates there could rise soon, the yen went as high as ¥121.18 versus the greenback before falling back to trade even against the dollar at ¥121.70. The new figures followed data last week that showed the corporate services price index in Japan had made its largest increase since 1998 in the last period reported. Some analysts expect that the Bank of Japan could raise interest rates again in August.