The pound rose for the first time in three days against the dollar as a U.S. jobs report spurred debate among investors as to when the Federal Reserve will withdraw stimulus that has weakened the U.S. currency.
The yen fell to a four-year low against the euro and weakened past 101 per dollar as Japan’s central bank kept its pledge to expand the monetary base as part of the government’s strategy to end 15 years of deflation.
The euro rose to the highest in more than four years versus the yen after a German report showed Europe’s economic recovery may be gaining momentum, easing speculation the central bank will cut interest rates further.
The dollar rose from the lowest level in a week as investors wagered the Federal Reserve is still moving toward reducing its bond buying after chairman- nominee Janet Yellen said it “will not continue indefinitely.”
Strategists are raising their forecasts for the pound more than for any other currency versus the euro on speculation an improving U.K. economy is making the central bank more tolerant of a stronger exchange rate.
Morgan Stanley and Citigroup Inc. strategists are maintaining their view that the dollar will appreciate next year, despite recent weakness, as the U.S. recovery accelerates and the Federal Reserve curbs stimulus.