Financial markets in Asia, Europe and the U.S. will be
closed on Friday, Jan. 1, for the New Year holiday.
Full coverage of global foreign exchange markets []
will resume out of Tokyo on Monday, Jan. 4.
* Dollar breaks 93 yen for first time since September
* Greenback down about 4 percent in 2009
* Dollar index up 3.5 pct in Dec; U.S. rate outlook key
* Jobless claims data boosts hopes for U.S. recovery
(Updates prices, adds detail about jobs data, comment)
By Steven C. Johnson
NEW YORK, Dec 31 (Reuters) - The dollar hit a 3-1/2-month
peak against the yen on Thursday after data showed initial
applications for U.S. jobless benefits fell to their lowest
level since mid-2008, lifting optimism about the U.S. economy.
The greenback also erased earlier losses against the euro
and was headed for its best month against a basket of major
currencies since January <.DXY> on the view that recent strong
economic data is a harbinger of strong growth next year and may
prompt the Federal Reserve to raise interest rates sooner than
expected.
Thursday's report showing that Americans filed fewer
jobless claims in the latest week than at any time in 17
months added to that view. For details, see []
"These numbers are very strong -- the best since July,
2008. That shows that the job market is stabilizing," said John
Doyle, currency strategist at Tempus Consulting in Washington.
"The price action this morning has been muted just because
of the lack of liquidity in the market, but I think going
forward, the interest rate expectations in the United States
will start to rise and the dollar will gain."
The dollar was up 0.4 percent at 92.92 yen <JPY=> after
earlier rising above 93 yen for the first time since early
September. The euro fell as low as $1.4308 and was last little
changed at $1.4343 <EUR=>, off an overnight peak of $1.4441.
Sterling rose 0.6 percent to $1.6153 <GBP=> while the
dollar slipped 0.3 percent to 1.0335 Swiss francs <CHF=>.
TOUGH YEAR ENDS BETTER FOR DOLLAR
The euro was set to finish the year up 2.5 percent against
the dollar, although it has shed about 4.4 percent in
December.
Against a basket of currencies, the dollar was down 4.1
percent this year, but it was about 4 percent higher in
December, its best monthly performance since January 2009.
For most of the year, the dollar fell sharply as investors
bet the U.S. economy would lag recovery elsewhere and the Fed
would hold rates at record lows for an extended period.
That trend began to change in December with the onslaught
of stronger-than-expected U.S. data, and though traders chalk
up some of the greenback's gains this month to
position-squaring, they also point to a more constructive tone
for the currency.
"We could see a partial retracement of December's sharp
dollar rally early in 2010, but ultimately further improvement
in U.S. data will fuel Fed tightening expectations and support
the dollar," said Lee Hardman, currency economist at Bank of
Tokyo-Mitsubishi UFJ.
The Australian and New Zealand dollars were among the best
performers among the major currencies in 2009, rising about 28
percent and 25 percent, respectively, against the dollar.
Next week, investors will look to the release of U.S.
monthly payrolls data on Friday, where further indications of
an improving U.S. economy could lift the dollar.
"It's going to be a hugely important number," said a trader
at an Australian bank in Sydney. "Anything above forecast could
see the euro finally break down through $1.42 toward $1.40.
"A weak result would be a real dampener after the run of
upbeat figures we've seen. The market would have to rethink the
Fed timing again, and that could see the euro back up at
$1.4700," the trader said.
(Additional reporting by Wanfeng Zhou in New York, Jessica
Mortimer in London and Wayne Cole in Syndey; Editing by Leslie
Adler)
