The dollar on Thursday neared a seven-year high against the yen amid heightened speculation that Japan's prime minister will call a snap election next month, and dipped against the euro. The greenback posted gains against Britain's pound, which plumbed 14-month lows against the US currency. The dollar index eased 0.1 percent after New York Federal Reserve President William Dudley said any premature tightening in US monetary policy could hurt economic recovery.
"The market seems content to sit in the range here and bide time on the dollar," said Shaun Osborne, chief foreign exchange strategist at TD Securities in Toronto. "We think the dollar in the long run goes up." Investment interest in the dollar softened this week as US yields steadied after a run-up and few US economic reports were issued to drive transactions, according to Osborne.
"We may see a bit more interest after the (US) retail sales on Friday," Osborne said. The dollar was up 0.2 percent at 115.71 yen, not far from a seven-year high of 116.11 struck on Tuesday. It briefly touched a low of 115.32 yen after government data showed that more Americans last week filed for jobless benefits than expected but still near a 14-year low. An election in Japan is seen returning Prime Minister Shinzo Abe to power with a bigger mandate, which analysts believe would allow him to implement a second round of reflationary policies and possibly delay a planned sales tax hike. That has spurred a rally in Japanese stocks and weighed on the yen.
A senior figure in Abe's ruling party told reporters it appeared the premier had decided to call an election. Abe is expected to make his decision depending on the strength of economic indicators, with third-quarter gross domestic product data due on Monday. The euro rose 0.3 percent against the dollar to $1.2476. Sterling dipped to a 14-month low against the dollar, with weaker British housing data adding to pressure on the pound from a shift in the Bank of England's economic outlook a day earlier. The pound was last off 0.4 percent at $1.5709 and is down 5 percent year to date against the dollar.
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