Dollar holds gains in Asia

The US dollar held near a six-year peak against the yen early on Thursday and powered to a seven-month high on its New Zealand peer, which fell after the country's central bank said the kiwi's current level was "unjustified and unsustainable". The US dollar traded at 106.74 yen, after having scaled a six-year high of 106.89 yen in New York on Wednesday, which represented a gain of 1.7 percent so far this week.
The dollar index traded at 84.200, near a 14-month high of 84.519 reached on Tuesday. The Australian dollar, which recently struck 5-month lows against the US dollar, bucked the broad strength in the US unit after Australian jobs data showed a surprisingly big jump in payrolls. The greenback has been a star performer this week, partly because investors are again getting nervous about when the Federal Reserve might start to lift interest rates, with eyes on the US central bank's meeting next week for any signal on the likely timing.
The consequent rise in US Treasury yields helped boost sentiment toward the greenback, particularly against low-yielding peers such as the yen and euro. "A growing number of people are starting look for further upside in the dollar," said a trader at a Western bank. "But the implied volatility on the dollar/yen has fallen today after recent rises, which suggests some people are already starting to take profits (on dollar/yen calls). I suspect the dollar's latest rally is already in the middle stage. The dollar could rise to 108 yen, but perhaps not to 110 yen," he said.
Talked down by its own central bank, the kiwi sank as low as $0.8180, bringing into view its 2014 trough of $0.8052 set in February. It has fallen more than 6 US cents from the July high of $0.8839. "We expect a further significant depreciation, which should be reinforced as monetary policy in the US begins to normalise," Reserve Bank of New Zealand Governor Graeme Wheeler said in a statement. Startlingly strong Australian jobs data led markets to almost abandon any chance of further rate cuts, and helped the Aussie recover from five-month lows.
The Aussie rose 0.4 percent on the day to $0.9192, off Wednesday's low of $0.9113. The euro was still laid low after last week's policy easing by the European Central Bank. It traded at $1.2914, flat on the day but struggling to break away from a 14-month trough of $1.2859 plumbed on Tuesday. The euro jumped to a one-month high of 1.2119 francs on Wednesday, well off a near two-year low of 1.2045 hit last week. It stood at 1.2095 francs in Asia.