Dollar poised for annual gain versus the yen

After three years hiatus, the US dollar is poised for annual gain versus the yen as market is confident of the U.S. recovery. It is expected that the Federal Reserve may withdraw stimulus which will result in higher bond yields.

US Dollar is ready for monthly advance against the euro on speculation that manufacturing in the U.S. expanded for a fifth month and employers didn’t cut any jobs in December.

The yen was at a three-week low versus the euro on prospects the Bank of Japan will add to credit-easing measures to revive growth in the world’s second-largest economy.

A combination of higher U.S. yields and further signs of improvement in the labor situation in the U.S. should continue to underpin the dollar.  There is a stronger sense that 2009 was not as kind to the Japanese economy as it was to other parts of Asia.

The U.S. currency bought 92.39 yen at 6:04 a.m. in London from 92.44 yen in New York yesterday, when it reached 92.77 yen, the strongest level since Sept. 8. The dollar traded at $1.4370 per euro from $1.4339. The euro was at 132.76 yen from 132.54, after earlier touching 132.85 yen, the highest since Dec. 7.

The dollar has fallen this year against all of the 16 most- traded counterparts except for the yen as a global recovery eroded demand for the safety of the world’s reserve currency.