Investing.com - The dollar pushed higher against the yen and the Swiss franc on Monday, as mounting expectations for a reductions to the Federal Reserve’s stimulus program this week underpinned dollar demand.
USD/JPY hit highs of 102.94, and was last up 0.21% to 102.54, recovering from seven week lows of 101.76 hit earlier on Monday.
Investors were turning their attention to the outcome of the Fed’s monthly meeting on Wednesday, amid expectations for a reduction in its bond buying program to USD65 billion from the current USD75 billion.
Demand for the traditional safe haven yen continued to remain supported is spite of some signs of stabilization in emerging markets.
Investor sentiment improved as a broad based selloff in emerging market currencies stalled after Turkey’s central bank announced an emergency meeting on Tuesday. The announcement came after the lira hit the latest in a series of record lows against the dollar on Monday.
Emerging market currencies have been hard hit since the Fed began scaling back its asset purchase program, while worries over political instability and the outlook for growth for some countries also weighed.
USD/CHF was up 0.23% to 0.8963, recovering from three-week lows of 0.8902 reached on Friday.
Elsewhere, the euro was fractionally lower against the dollar, with EUR/USD dipping 0.05% to 1.3672.
The pair hit session highs of 1.3717 earlier after data showed that German business confidence rose to the highest level in two-and-a-half years in January.
The German research institute Ifo said its business climate index rose to 110.6 in January, above forecasts for a reading of 110.0 and up from 109.5 in December, indicating that businesses in the euro zone’s largest economy had a strong start to the year.
GBP/USD hit session highs of 1.6587 and was last up 0.52% to 1.6566. Sterling remained supported after a sharp fall in the U.K. unemployment rate heightened expectations that the Bank of England may raise interest rates sooner than anticipated.
The Australian dollar backed off three-and-a-half year lows against the U.S. dollar with AUD/USD up 0.75% to 0.8747, after falling to lows of 0.8659 on Friday, the lowest level since July 2010.
NZD/USD was up 0.50% to trade at 0.8254, ahead of Thursday’s central bank rate review, with markets split on whether the Reserve Bank will raise rates at this meeting or the next.
The Canadian dollar extended its pullback from four-and-a-half year lows against the U.S. dollar, with USD/CAD down 0.25% to 1.1058.
The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, inched down 0.04% to 80.52.