(Updates to U.S. trading, changes byline, dateline, previous
LONDON)
* Oil gain, record U.S. home sales back dollar rise
* Dollar touches two-week high vs yen, near two-week high vs
euro
* Expectations grow BoJ could move next week after Kuroda
comments
By Dion Rabouin
NEW YORK, Jan 22 (Reuters) - The dollar firmed on Friday,
boosted by increased expectations of monetary easing by central
banks in Europe and Japan, and by strong U.S. housing data.
The dollar touched a two-week high against the yen, which
has risen nearly 3 percent versus the greenback this year as the
sell-off in oil CLC1 LCOc1 and global equity markets
.MIWD00000PUS has pushed traders to seek out the safe-haven
currency.
The dollar rose 0.7 percent to 118.50 yen JPY= .
The euro EUR= fell below $1.08 to the dollar for the
second time in as many days, nearing a two-week low. The euro
zone common currency was last down 0.5 percent to $1.0818.
Investors "are still very much watching three or four
different things from other markets, not least China and U.S.
equities," said Alan Ruskin, global head of FX strategy at
Deutsche Bank (DE:DBKGn) in New York. "But the biggest mover and most
influential by far, in the last 24 hours at least, has been the
recovery in crude oil."
Crude prices rose more than 6 percent on Friday as cold
weather boosted demand for heating oil across the United States
and Europe. Crude futures were poised for their first weekly
gain this year. O/R
Generally, the dollar's strength has contributed to weakness
in oil. However, crude's rebound now suggests improved overall
global sentiment, and that is driving money away from the euro
and yen via so-called carry trades.
When sentiment is strong, investors borrow in the yen and
euro to put money into higher-yielding currencies; the United
States has higher interest rates than Japan and the countries of
major European markets.
Currencies tied to oil production, such as the Canadian
dollar CAD=D4 , were stronger. The loonie rose 0.8 percent, and
was headed for its second straight day of big gains against the
greenback.
The U.S. dollar got a bounce mid-morning from data showing
U.S. existing home sales jumped a record 14.7 percent in
December. Sales rose 6.5 percent for the whole of 2015, making
it the strongest year since 2006.
After European Central Bank chief Mario Draghi said the bank
would need to review policy in March, which was read in the
market as a promise of more easing, sources familiar with the
Bank of Japan's thinking said the market turmoil could lead it
to consider more asset purchases.
Bank of Japan Governor Haruhiko Kuroda said Friday at the
World Economic Forum in Davos there is further room for the BoJ
to expand its quantitative easing program if inflation continues
to be hit by the oil price slump and slowing economic growth.