Dollar holds gains against yen, steadies ahead of Trump inauguration
The yen was poised for its strongest weekly performance in over a month as expectations for a Bank of Japan rate hike next week grow, putting the dollar on the back foot.
It climbed more than 1% against the dollar this week, reversing last week's decline, and touched a one-month high of 154.98 per dollar earlier on Friday. The greenback was last up 0.68% against the yen at 156.165. «The yen is going to remain pretty married to U.S. rates,» said Brad Bechtel, global head of FX at Jefferies.
«I think this cooling we've seen this week has helped take the pressure off dollar-yen. The BOJ seems ready to hike next week, and at the margin, that'll be positive for the yen. But with interest rate differential still very wide, it's hard for dollar-yen to really move significantly lower.»
Remarks from BOJ officials along with Japanese data that point to persistent price pressure and strong wage growth have helped boost market confidence that a rate shift is in the offing, with traders pricing in an 80% chance of a hike next week.
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