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The dollar strengthened to a two-month high against the yen as signs the world’s largest economy is gathering momentum boosted the appeal of the U.S. currency.

The greenback rose versus the majority of its 16 major peers as a gauge of national business activity improved in September and after payroll gains last week topped forecasts. The yen declined before the government releases its quarterly economic-growth data on Thursday. The pound dropped to the lowest in two months versus the dollar after U.K. inflation slowed more than forecast. Sweden’s krona slumped.

Nov. 11 (Bloomberg) -- Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney, talks about the U.S. and the Australian dollars, and global trading strategy. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move." (Source: Bloomberg)

“It’s a continuation of broad dollar strength across the board,”Fabian Eliasson, head of U.S. currency sales in New York at Mizuho Financial Group Inc., said in a phone interview. “The dollar has been outperforming other currencies in the wake of last week’s number. We’re still sort of riding the coattail of that into this week.”

The dollar rose 0.5 percent to 99.69 yen at 9:28 a.m. in New York after advancing to 99.80 yen, the strongest level since Sept. 13. It last touched 100 yen on Sept. 11. The U.S. currency fell 0.2 percent to $1.3435 per euro. The yen weakened 0.7 percent to 133.93 per euro.

The Bloomberg U.S. Dollar Index, which monitors the greenback against 10 major counterparts, rose 0.1 percent to 1,022.17 after reaching 1,025.01, the highest since Sept. 13.

Pound Falls

The pound fell for a third day versus the dollar and euro as the National Statistics Office said annual consumer-price inflation slowed to 2.2 percent last month from 2.7 percent in September. That’s less than the 2.5 percent rate predicted in a Bloomberg News survey.

The Bank of England publishes new economic forecasts in its quarterly Inflation Report tomorrow. Policy makers have pledged to hold their key interest rate at a record low as long as inflation expectations remain anchored to their 2 percent goal.

“Interest-rate expectations are going to be pared back after the inflation data,” said David Bloom, global head of currency strategy at HSBC Holdings Plc in London. “This has put sterling on the back foot.”

The pound dropped 0.6 percent to $1.5900 after falling to $1.5855, the lowest level since Sept. 13. Sterling slid 0.8 percent to 84.48 pence per euro.

Aussie, Krona

Australia’s dollar fell for a fourth day as an industry report showed business sentiment worsened last month.

A sentiment gauge among Australian businesses dropped to 5 in October from 12 the prior month, National Australia Bank Ltd. said. A measure of business conditions was unchanged at minus 4.

“The market has taken on board that things are improving perhaps not only not as fast as people thought, but not at all,” Ray Attrill, global co-head of currency strategy at National Australia Bank in Sydney. “The sentiment at the moment is a little bit bearish on the Aussie, which essentially means that news that can be seen as negative is likely to resonate.”

The Aussie dropped 0.5 percent to 93.17 U.S. cents after sliding to 93.12 cents, the lowest level since Oct. 1.

Sweden’s krona weakened to a 17-month low versus the euro after a report showed the nation unexpectedly returned to deflation last month, boosting speculation the central bank will cut interest rates.

The krona slid 1.4 percent to 8.9153 per euro after declining to 8.9266, the weakest since June 2012.

Economic Reports

The dollar extended gains after the Chicago Federal Reserve national index rose to 0.14 in September from a revised 0.13 the month before, with 47 of the 85 monthly individual indicators making positive contributions.

The greenback rose 0.6 percent last week after a gain of 204,000 workers in October topped all forecast in a Bloomberg survey. First-time jobless claims dropped to 330,000 last week from 336,000 the previous week, a separate survey showed before the report tomorrow.

The Bloomberg U.S. Financial Conditions Index (BFCIUS), which combines everything from money-market rates to yields on government and corporate bonds to equity volatility, climbed 0.4 percent to 1.825, set for the highest closing level in data starting in January 1994.

The dollar has gained 4.3 percent this year, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-nation currencies. The yen tumbled 11 percent, while the euro appreciated 6.4 percent.

100 Yen

The yen declined against most of its major counterparts today before the Cabinet Office reports tomorrow that Japan’s economic growth slowed to 0.4 percent in the third quarter from 0.9 percent in the previous three months, according to a Bloomberg News survey.

“There’s a strong chance that the dollar hits 100 yen in the next day or so,” said Adam Myers, European head of foreign-exchange strategy at Credit Agricole Corporate & Investment Bank in London. “The dollar will move higher versus the yen as the market will bring forward its estimate for U.S. tapering.”

The dollar will appreciate to 103 yen in six months and 105 within a year, Myers said, citing Credit Agricole’s forecasts. It hasn’t reached 105 since October 2008.


Policy makers will pare the monthly pace of bond buying to $70 billion at their March 18-19 meeting from the current pace of $85 billion, according to the median of 32 economist estimates in a Bloomberg News survey on Nov. 8. The median forecast in an Oct. 17-18 survey of 40 economists also called for a reduction to $70 billion in March.

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