Dollar near 13-month high

Monday, July 18, 2005 | 9:46 a.m.

The dollar traded near a 13-month high against the yen in Europe on expectations a report will show international investors increased purchases of U.S. assets.

Global investors bought a net $60 billion in U.S. assets in May, the Treasury Department will probably say, compared with a trade deficit of $55.3 billion. Federal Reserve Chairman Alan Greenspan in testimony this week may signal more interest-rate increases, which have helped the dollar rise 9.4 percent against the yen and 12 percent versus the euro this year.

"We expect a strong number and for inflows to exceed the trade deficit for the first time in three months," said Callum Henderson, head of global currency strategy in Singapore at Standard Chartered Plc. "That should be dollar-supportive."

The dollar traded at 112.23 yen as of 6:09 a.m. in London from 112.17 late in New York on July 15, according to EBS, an electronic foreign-exchange dealing system. It rose to the highest in more than a year at 112.60 on July 8.

The U.S. currency was at $1.2047 per euro, from $1.2037. The dollar may strengthen to 112.50 yen and $1.20 per euro today, Henderson said. Trading may be less than usual because of a holiday in Tokyo.

The U.S. trade deficit narrowed to $55.3 billion in May from $56.9 billion in April, the Commerce Department said on July 13. The data helped send the U.S. currency up 1.2 percent against the euro and 1 percent versus the yen that day.

U.S. asset purchases probably rose for a second month to a net $60 billion, compared with $47.4 billion in April and $40.56 billion in March, according to the median forecast in a Bloomberg survey of seven economists. The report is scheduled for release at 9 a.m. in Washington.