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US dollar surges after Yellen speech

TOKYO--The dollar surged Monday as investors bet on a U.S. rate hike sooner rather than later, following a speech by U.S. Federal Reserve chief Janet Yellen.

The greenback rose to 104.18 yen — its highest level since January — from 103.87 yen in New York Friday.

The euro bought US$1.3205 and 137.57 yen, compared with US$1.3241 and 137.60 yen in New York.

Investors picked up the dollar after Yellen discussed slack seen in the U.S. jobs market, while acknowledging improvements in recent U.S. indicators.

Her address on Friday at the annual Jackson Hole conference was seen as a signal of her commitment to the Fed's current timeline for raising interest rates beginning in the second half of next year, rather than earlier as some analysts and policy makers would like.

Still, the dollar swung upward as market players believed that her comment came out less dovish than expected, while many analysts also assessed the speech as being “balanced.”

Market participants speculate that the Fed could increase rates sooner than expected, should consumer prices and wages rise amid calls from the inflation hawks, said Junichi Ishikawa, market analyst at IG Securities.

“Her comments at Jackson Hole were balanced, and took into consideration the positions of the more hawkish members of the Fed,” he told Dow Jones Newswires.

Credit Agricole said it expected a possible brief “pause” in coming days for the dollar's general appreciation, but the rising trend should remain.

The dollar rose against other Asia-Pacific currencies.

It rose to SG$1.2506 from SG$1.2478 on Friday, to 32.01 Thai baht from 31.89 baht and to 11,715.30 Indonesian rupiah from 11,655.00 rupiah.

The greenback also rose to 1,019.90 South Korean won from 1,017.35 won, to 43.83 Philippine pesos from 43.79 pesos, to 60.43 Indian rupees from 60.42 rupees.

The Australian dollar slipped to 93.17 U.S. cents from 93.23 cents, while the Chinese yuan was quoted at 16.94 yen against 16.81 yen.

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