NEW YORK -- The dollar climbed to five-month highs against the Japanese yen yesterday in thin Easter holiday trading.
The dollar was trading at 107.14 yen late in New York, up from 106.33 late Thursday, after reaching 107.37 earlier in the day. The euro fell to $1.2879 from $1.2934 late Thursday.
European financial markets were closed Friday and yesterday in observance of the Easter holiday. US financial markets were also closed Friday.
''In thin trading, sentiment shifts as we've seen over the past week can be exacerbated," said Michael Woolfolk, senior currency strategist at Bank of New York, noting that no important data were released yesterday.
The dollar has been rebounding since last Tuesday, when the Federal Reserve boosted interest rates by a quarter-point and issued a hawkish statement on stronger inflationary pressures. The Fed is expected to make further rate hikes throughout the year. Higher US interest rates tend to help the dollar by making assets denominated in the currency more attractive to investors.
Helping the dollar's rise against the yen is the surge in crude futures, Woolfolk said, as Japan's economy is sensitive to high energy prices.
''As energy prices move higher, it is the yen that gets hit the hardest," he said.
The euro rose from around $1.20 in September to a record high of $1.3667 at the end of December on concerns over the US trade and budget deficits, and has since leveled off. But some analysts say the euro will keep strengthening this year unless the twin deficits are addressed.