The dollar held firm near a three-week high against the yen on Monday as risk appetite picked up after Tokyo shares followed Wall Street higher on hopes for a recovery in the US economy later in the year.
In choppy trade,the Australian dollar briefly touched a three-month high against its US counterpart and two-month peaks versus the yen on firmer gold and oil prices.
The Nikkei share average rose 2 per cent .N225 on Tokyo’s first day of stock trading in 2009,after US stocks surged late last week as investors discounted gloomy economic data including a sharp contraction in factory activity.
Traders said the dollar was getting support on hopes that US President-elect Barack Obama will unveil a fresh economic stimulus package aimed at creating 3 million jobs and resuscitating economic growth.
But the recovery against the yen looked fragile,and the greenback may not find clear direction until the US jobs report due later this week which could revive worries about the economy,traders said.
“The market has become inured to bad economic news after having seen so much since late last year,” said Minoru Shioiri,chief manager of forex trading at Mitsubishi UFJ Securities.
“Market players are still waiting to see if the dollar resumes its slide after the US jobs data or if it will maintain its strength on hopes for US President-elect Obama,” said Shioiri.
Traders said risk appetite would likely continue to recover if an expected US economic stimulus plan contains substantial measures to help the economy that do not disappoint the market.
The dollar rose 0.3 per cent from late New York trade on Friday to 91.99 yen,near the 92.41 yen struck late last week on trading platform EBS,its highest since mid-December.