The yen hit 14-week highs against the dollar yesterday as the carry trades that had depressed the Japanese currency's value continued to unwind.

The yen was valued at ¥117.52 at its peak yesterday compared to ¥118.38 last Wednesday, while the euro traded at $1.3184 and the pound $1.9587.

The yen has now risen two per cent against the dollar and euro since it began to rally on Tuesday, boosted by jitters as investors revised their risk exposure in the face of stock market falls.  

The dollar rose against the single currency following a US manufacturing report revealing that the sector was up through February.

"Renewed growth in manufacturing employment is an unexpectedly pleasant surprise," Bank of New York currency strategist Michael Woolfolk told Marketwatch.

"Today's report is the first unequivocally positive sign from the manufacturing sector in some time. If this continues, it may provide some much-needed support to the economy as the US housing market takes its next leg lower."
 
A second report revealed that core US personal consumption spending has exceeded the Federal Reserve's target rate over the year, providing additional support for the dollar.