The dollar climbed on Tuesday to a one-week high against the yen as data showed Chinese economic growth slowed less than many had feared and traders speculated whether the Bank of Japan could ease policy, curbing demand for the safe-haven Japanese currency. The greenback also strengthened on the International Monetary Fund's latest forecasts that showed the United States was on a faster growth trajectory than most other major economies.
"The dollar is stronger against the yen ... on better-than-expected Chinese data," said Ron Simpson, director of currency research at Action Economics in Tampa, Florida. China's economy grew 7.4 percent in 2014, the slowest in 24 years. It just missed its official 7.5 percent target but was above the 7.3 percent projected by analysts. Global stock market was last up 0.4 percent with Wall Street opening higher.
The dollar was up 0.9 percent against the yen at 118.615 yen after touching an earlier peak of 118.775. The Bank of Japan began a regular two-day policy meeting on Tuesday. "Yen selling ahead of a policy announcement is notably higher today, perhaps on rising expectations of some form of additional monetary easing by the BOJ tomorrow," said Derek Halpenny, European head of global market research at Bank of Tokyo Mitsubishi, in London.
Meanwhile, the euro was under pressure, brushing off a survey showing a surge in German analyst and investor sentiment this month as investors anticipated a possible announcement of a bond purchase program from the European Central Bank on Thursday in an effort to prevent deflation from spreading across the euro zone. Greece's election on Sunday, with the anti-bailout party Syriza leading in the polls, added to pressure on the euro. Against the dollar, the euro was 0.2 percent lower at $1.1582, having struck an 11-year low of $1.14595 on Friday. The single currency, however, improved 0.46 percent against the yen at 137.190.