Dollar remains strong against yen

Signs that the US economy is improving have helped to keep the dollar close to its highest level against the yen in more than four years. On Tuesday the US currency was buying 102.42 yen, but has since lost 0.1 per cent to end at 102.24 yen. Positive Treasury yields have also helped to buoy the dollar above 102 yen.

Households in the US now have more spending power as a fall in oil costs drove down the price of imports through April. The dollar is likely to continue to do well against the yen and could top 103 yen as the Bank of Japan continues with its policy of monetary easing.

The euro has pulled away from a five month dip against the greenback to $1.2935, an increase of 0.1 per cent. Investors will now be watching to see how the single currency reacts if the European Central Bank cuts its deposit rate.

The Australian dollar is also up against its US counterpart by 0.2 per cent to $0.9912. On Tuesday the Aussie dropped to its lowest level in almost a year against the greenback.

The euro remains under pressure as the ECB looks at reducing borrowing rates and the US Federal Reserve contemplates bringing its quantitative easing policies to an early close.