The US dollar rose to its highest level against the yen in 8-1/2 months on Wednesday and also gained against the euro and Swiss franc after oil prices soared and pushed US Treasury yields higher, while strong private payrolls data bolstered expectations for a hawkish Federal Reserve next year.
USD/JPY jumped about 1.7 percent to 114.43, its strongest level since early March. EUR/USD slipped about 0.8 percent to a session low of 1.0554 after WTI crude prices rallied as some of the world's largest oil producers agreed to curb oil output for the first time since 2008.
Oil prices soared as much as 10 percent on Wednesday as OPEC producers agreed to curb oil output for the first time since 2008 in a last-ditch bid to support prices.
The Organization of the Petroleum Exporting Countries agreed to cut production to 32.5 million barrels per day, Kuwait's oil minister said. The cuts include Iraq reducing output by 200,000 bpd to 4.351 million bpd beginning in January. The country had previously resisted cuts, providing a hurdle to an agreement.
The cut will put production at the low end of a preliminary agreement struck in Algiers in September, and will reduce output from a current 33.64 million bpd.
Gains in oil prices are likely to translate into higher inflation, which in turn sent US Treasury yields higher given the negative impact of inflation on bond prices. The higher Treasury yields fueled demand for the dollar relative to currencies such as the euro and yen, whose government bond yields are still low-to-negative.
