The dollar climbed to a four-year high against the yen today amid expectations that this week's US economic data will reduce expectations for Federal Reserve interest rate cuts.
This morning, the dollar was up 0.2 per cent on the day at 121.85 yen, having earlier hit a four-year peak of 122.19.
The euro also gained 0.4 per cent to 157.60 yen, a yen below last week's record high above 158.60.
Stronger-than-expected US durable goods orders and new home sales data released on Friday were the latest in a series of figures backing the view that the world's biggest economy might avoid a sharp slowdown and a cut in interest rates from the current 5.25 per cent.
In contrast, Japanese inflation data came in below expectations last week and retail sales numbers for December on Monday showed a year-on-year decline, suggesting that the Bank of Japan may find it difficult to justify a rate hike at its February meeting.
Investors are looking ahead to several US economic indicators this week -
including core inflation, the first estimate of fourth-quarter GDP growth and the January payrolls report, as well as the Fed's two-day policy-setting meeting ending on Wednesday.