Dollar hits fresh 1-month high vs. yen after upbeat U.S. data

TOKYO, Oct. 18 -- (Kyodo) _ The U.S. dollar climbed to a fresh one-month high in the lower 79 yen range Thursday in Tokyo on the back of stronger-than-expected data on U.S. housing starts and speculation regarding further easing by the Bank of Japan.

The dollar hit 79.22 yen at one point, its highest level since Sept. 19 in Tokyo trading before fetching 79.09-10 yen at 5 p.m., compared with 78.88-98 yen in New York and 78.80-81 yen in Tokyo at 5 p.m. Wednesday.

The dollar's lowest quote for the day was 79.00 yen and it changed hands most frequently at 79.14 yen.

The euro was quoted at $1.3090-3091 and 103.53-57 yen against $1.3115-3125 and 103.53-63 yen in New York and $1.3098-3099 and 103.21-25 yen in Tokyo late Wednesday afternoon.

The U.S. Commerce Department said Wednesday that housing starts in September surged 15 percent from August to an annual rate of 872,000 units, far exceeding the market consensus of 770,000 units.

Dealers said the housing data helped ease concern about the course of the U.S. economy, coming on top of a series of other upbeat U.S. economic data, including retail sales and industrial output readings released earlier this week.

"The main reason (behind the dollar's rise) was the data showing that the U.S. economy is not bad," said Norihiro Tsuruta, currency strategist at Mizuho Securities Research & Consulting. "The market has become pretty reactive to good economic data."

Also supporting the dollar's gains against the yen were media reports that the BOJ is likely to consider further monetary easing at its policy-setting meeting on Oct. 30 to prop up the domestic economy amid the global slowdown.

Etsuko Yamashita, chief economist at Sumitomo Mitsui Banking Corp., said it would be "quick" for the BOJ to take action if it decides on further easing at the upcoming policy meeting, following its decision last month to expand its asset purchase fund by 10 trillion yen to a total of 80 trillion yen.

"But it is becoming market consensus now that (the BOJ) is going to ease further," she said.

The euro remained firm against the yen after gaining ground the previous day on Moody's Investors Service's decision to leave Spain's credit rating at investment-grade level.

While traders are awaiting the outcome of the European Union leaders' two-day meeting in Brussels from Thursday, there is growing speculation that Spain will ask for a bailout in the near future to shore up its battered finances, underpinning the euro, dealers said.