US dollar tops ¥120 to strike 7-year high

The dollar rose Thursday above 120 yen for the first time in more than seven years, boosted by US economic optimism while Japanese stimulus weighed heavily on the yen.
At about 1420 GMT, the US currency climbed to 120.17 yen, its highest level since July 26, 2007, before easing back to stand at 119.90 yen.
"It’s unsurprising ... that the dollar has breached the 120 mark against the yen today," Spreadex trader Connor Campbell told AFP.
"Bar a few wobbles, like an oil-inspired dip last week, the dollar has been incredibly strong since the dual boost of the Bank of Japan (BoJ) beginning QE (quantitative easing) just as the US Federal Reserve announced it was ending its similar programme."
He added: "Combine this with the uncertainty for any currency approaching an election, and a perfect storm was created, a storm that the dollar took full advantage of."
At the same time, the dollar has also benefited from growing confidence in the strength of the US economic recovery.
Forex.com analyst Fawad Razaqzada predicted the greenback could surge even higher, given the policy divergence between the US and Japanese central banks.
"The dollar/yen could go further higher once profit-taking around the key 120 level fades," he told AFP.
"With the BoJ continuing to loosen policy and the Fed tightening, I would not be surprised if it were to reach the 2007 peak of around 124 before the year-end."
The BoJ surprised global financial markets on October 31 by announcing it would inflate its asset-buying plan by up to 80 trillion yen ($676 billion) annually.
The decision, which came days after the Federal Reserve wound down its own stimulus, subsequently sent the yen plunging to a series of multi-year lows against both the dollar and euro.
"The question is not what is pushing the dollar towards and beyond the 120 yen barrier -- but why it hasn’t gone through this level sooner," added analyst Rebecca O'Keeffe at online brokerage Interactive Investor.
"The end of QE in the US, combined with the vast quantity of money that the Bank of Japan continues to pump into the market, has made the yen a one-way bet and there appears little to prevent it from weakening further."