Dollar nears year high vs yen after U.S. CPI, Yellen coments; Euro lower on Greece

On Monday the greenback rose against the yen approaching its year high in Asian trade, extending gains after positive U.S. inflation data and Friday's comments by Federal Reserve head Janet Yellen.

The common currency declined after Greek leaders said the country will not make International Monetary Fund repayments that are due in June.

The greenback reached 121.78 vs yen before slightly weakening to 121.67. That is higher compared with 121.55 level late Friday in New York.

Given a boost from positive U.S. inflation and Yellen’s remarks, the dollar is now approaching its year high of ¥122.04 set on March 10.

The Department of Labor said Friday that the U.S. consumer price index rose 0.1% in April, in line with expectations and after a 0.2% gain the previous month. Year-on-year, consumer prices slipped 0.2% last month however, compared to expectations for a 0.1% downtick, following a 0.1% fall in March.

U.S. core inflation in April, excluding volatile food and energy prices, showed the biggest gain since January 2013, while Yellen said the central bank is on track to raise interest rates sometime this year.

The Nikkei Stock Average rose 0.7% midday giving a support to the dollar by allowing selling of the yen, considered as a safe asset.

However, the trade is expected to be quiet with many overseas investors away on holiday and due to a lack of fresh trading cues. Financial markets are closed elsewhere in the world including the U.S. for Memorial Day and the U.K. for Spring Bank Holiday.

But after confirming solid downside support around ¥118 and ¥119, later in the year and then with “investors’ eyes accustomed to stay around ¥120” in recent session, the dollar is now positioned better to try its upside against the yen, said Ueno.

Investors were hardly impacted by Japan’s merchandise trade balance for April released earlier Monday by the government.

A month after its first surplus in nearly three years, the world’s third largest economy logged a ¥Y53.4 billion deficit.

The euro fell to $1.0993 from $1.1017, while the common currency was at ¥133.68 from ¥133.83.

On Sunday Greece said that it won’t have the money it must repay to the International Monetary Fund next month unless it strikes a deal with international creditors over further rescue funding.