The US dollar hit a six-week high against the yen on Tuesday as traders discounted weak US economic data and anticipated that the Federal Reserve would prepare markets for an interest rate increase in June in its Wednesday statement. The dollar hit 112.30 yen, its highest since March 21, despite data on Monday showing weak US factory activity and inflation and last week's release of US first-quarter gross domestic product, which showed the weakest performance in three years.

Analysts said the data was not enough to stifle risk appetite, which in turn hurt the safe-haven yen. Some analysts also said the closure of Tokyo markets for the Golden Week holidays was contributing to a lack of liquidity in the yen, which exacerbated its weakness against the dollar and the euro. "It's just a good old-fashioned risk-on trade, which correlates with the yen weakening," said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.

The weakness in US economic data has not altered expectations that the Fed will hike interest rates in June, analysts have said. That, in turn, has boosted the dollar against the yen and kept it relatively stable against the euro. The euro was last mostly flat against the dollar at $1.0901. The dollar was last up 0.3 percent against the yen at 112.13 yen, not far from its six-week high.

Along with the Fed statement, traders were awaiting Friday's US April non-farm payrolls report from the US Labour Department. Economists polled by Reuters expect US employers to have added 185,000 jobs last month, up from March's 98,000. The dollar index, which measures the greenback against a basket of six major rivals, was last up 0.1 percent at 99.171.

Copyright Reuters, 2017