USD/JPY rises to two-month high after ISM data shows services sector improves

The dollar rose to a two-month high against the yen on Wednesday as a stronger-than-forecast private report on the U.S. services sector in July revived bets the Federal Reserve would raise interest rates as early as September.

The Institute for Supply Management said its services sector index rose last month to 60.3, its highest reading since August 2005.

USD/JPY rose to 124.92 yen. The dollar also strengthened against other major currencies. The dollar index erased its earlier losses and was up 0.2 percent at 98.121.

Sterling was alone among major currencies in resisting a resurgent dollar on Wednesday, pointing to growing expectations that the Bank of England will follow swiftly on the heels of any rise in U.S. interest rates.

Atlanta Federal Reserve chief Dennis Lockhart bolstered bets on Tuesday that the U.S. central bank might move on rates as early as September, sending sterling around 1 cent lower against the dollar.

But with momentum also building for a rate hike in Britain, the pound recovered around half of that loss on Wednesday and was just over 0.1 percent higher on the day at $1.5581. It gained a third of a percent to hit a 2-week high of 69.65 pence per euro.

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