TOKYO- The dollar rose in Asia Wednesday, boosted by upbeat sentiment, but it is still sitting around more than five-and-a-half-year lows against the pound after a strong set of British manufacturing figures.
In midday Tokyo trading, the greenback strengthened to 101.61 yen from 101.53 yen in New York Tuesday afternoon as investor appetite for higher risk assets picked up.
The euro bought $1.3675 and 138.98 yen against $1.3677 and 138.88 yen ahead of a European Central Bank (ECB) meeting on Thursday.
The pound bought $1.7150 in Tokyo after hitting $1.7166 late Tuesday, the highest level since October 2008.
Currency dealers have been moving into the pound in recent weeks after the head of the Bank of England suggested interest rates could rise sooner than initially thought as the economy picks up pace.
“Markets started the third quarter in strong fashion, as global manufacturing data provided more evidence supporting the story of improving Chinese momentum and healthy US growth,” Credit Agricole said.
Chinese manufacturing activity expanded at its fastest pace this year in June, indicating that Beijing’s attempts to tackle slowing growth in the world’s number two economy are gaining traction.
In the US, the Institute for Supply Management’s closely watched purchasing managers index of manufacturing activity dipped 0.1 point to 55.3 in June. However, it is still the second-highest of 2014, after May’s 55.4 peak.
A reading above 50 indicates expansion.
Investors are now waiting for the release of US employment data and a speech by Federal Reserve chief Janet Yellen, Credit Agricole said, although it added that she “will unlikely deviate from her recent dovish tone significantly”.
ECB officials hold their next policy meeting Thursday and are expected to stand pat on any new measures after an unprecedented stimulus package last month introduced to fend off deflation.
“Europe continues to modestly struggle as a whole,” National Australia Bank said.
“This represents the pattern already known and seen by their respective monetary policy directions. It just adds to the evidence.”
A Bank of Japan report Tuesday showed business confidence among large manufacturers for the April-June quarter eased after hitting a more than six-year high in the previous quarter.
But, on a brighter note, the Tankan survey also showed that big firms plan to boost their capital spending in the current fiscal year to March.