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Dollar rises against yen as oil spike boosts risk appetite

The dollar briefly touched its strongest level against the yen in more than a week on Thursday as a spike in oil prices stoked investors’ appetite for riskier assets, weighing on the haven yen.

The greenback USDJPY, +0.30% traded as high as ¥101.75 early in the European trading day, its strongest level since Sept. 21. In recent trade, one dollar bought ¥101.48, compared with ¥100.93.

Oil prices shot higher late Wednesday after The Wall Street Journal reported that members of the Organization for the Petroleum Exporting Countries had agreed on the need to cap oil production, but decided to wait until November to iron out the details of a plan.

November West Texas Intermediate crude rose 5.3% on Wednesday, and continued to move higher during the Asia trading day on Thursday, boosting stocks and the currencies of major oil exporters while weakening the yen.
But skepticism about whether a cap would ever actually be implemented soon set in, and oil prices moved off their highs. U.S.-traded crude CLX6, +1.81% for November delivery was down 0.3% at $46.93 a barrel.

This curbed rallies in the Canadian dollar, Russian ruble and several other commodity-linked currencies. In recent trade, the dollar USDCAD, +0.5504% bought C$1.3083, compared with C$1.3059 late Wednesday. Meanwhile, it USDRUB, +0.1578% bought 63.17 Russian rubles, compared with 63.06 rubles late Wednesday.

The greenback is on track to rise modestly against the yen for a third day, but “the true direction in the pair may not be known until next week, when a slew of U.S. data could either confirm or deny the speculation of a December hike,” said Boris Schlossberg,

Comments from Esther George, who was one of three Fed officials who voted to raise interest rates in September, helped support the dollar overnight. George insisted that rates need to rise steadily or the central bank risks falling behind.

But Jane Foley, a senior currency strategist at Rabobank, said hawkish comments from Fed officials wouldn’t have a lasting impact on the dollar unless U.S. economic data improve.

“Unless we have robust data, the market is going to remain skeptical of the ability of the Fed to raise interest rates progressively throughout 2017,” Foley said.

In other currency trading, the euro EURUSD, -0.0178% was off slightly, buying $1.1213, compared with $1.1223 late Wednesday. Meanwhile, the pound GBPUSD, -0.3917% traded at $1.3009, compared with $1.3044 Wednesday.

The dollar ticked higher after revised data showed the U.S. economy grew at a faster pace in the second quarter than was previously reported.

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