The U.S. currency may extend gains to a third day versus the yen as the Treasury prepares to sell $49 billion of two- and five-year notes today and tomorrow. Traders increased bets that the Federal Reserve will raise the benchmark interest rate before year-end, sending the dollar higher against the British pound.
The U.S. currency traded at $1.5692 per euro as of 11:28 a.m. in Tokyo after rising as high as $1.5666, the strongest level since May 21. It was at $1.5691 a euro in New York yesterday. The dollar traded at 104.12 yen from 104.24 yen yesterday. The euro was at 163.40 yen from 163.58 yen.
The correlation coefficient between oil and the euro-dollar exchange rate was 0.95 for the past year, according to data compiled by Bloomberg. A reading of 1 signals they move in lockstep.
Crude oil fell for a second day, extending the biggest decline since April, on signs that U.S. fuel consumption is dropping. Futures traded at $128.68 a barrel in after hours electronic trading on the New York Mercantile Exchange compared with a record $135.09 reached on May 22.
Futures on the Chicago Board of Trade showed a 28 percent likelihood the Federal Reserve will raise its target interest rate by a quarter-percentage point at its Sept. 16 meeting, up from 23 percent a day earlier.
The dollar's gain may be limited before a government report today that economists estimate will show orders for durable goods fell for a second month in April. Orders for computers, machinery and other items designed to last several years probably fell 1.5 percent, following a 0.3 percent decline the previous month, according to the median forecast of economists surveyed by Bloomberg News.