Yen continues to rise on BoJ’s signs to change policy

The yen continued its sharp rise on Friday and is on track to record its best weekly performance against the dollar in nearly five months, with traders’ expectations increasing that Japan will soon end its ultra-easy monetary policy.

A generally stronger yen capped the dollar’s rise, which remained in a defensive zone ahead of the much-watched non-farm payrolls report later on Friday.

Central Bank of Japan Governor Kazuo Ueda said on Thursday that the bank has several options regarding the interest rates it will target once it is able to get the cost of short-term borrowing out of negative territory, and on the same day he met with Prime Minister Fumio Kishida.

The markets received these statements as the clearest indication that the Bank of Japan will soon end its extremely easy monetary policy, which pushed the yen to rise to its highest levels in several months against major competing currencies.

The yen rose against the dollar by nearly 0.3 percent, recording 143.74, after rising more than 1 percent against the dollar earlier in the session.

The yen rose more than 2 percent on Thursday, its biggest one-day rise since January, and is on track to end the week with a jump of more than 2 percent.

A month ago, the yen fell to its lowest level in a year, recording 151.92 to the dollar, under pressure from the widening interest rate differential between Japan and the United States.

As for the British pound, it fell to its lowest level in two months to 179.56 yen today, Friday. Against the euro, the Japanese currency recorded 155.15, not far from the previous session, in which it recorded the highest level in four months, which was 153.215 to the euro.

All eyes are on the Bank of Japan’s next monetary policy meeting scheduled for December 18 to determine whether it is actually changing its policy.

In the broader market, the dollar’s movement was characterized as episodic and limited against other currencies other than the yen before the release of US jobs data.

The euro stabilized at $1.0783 and is on track to record a weekly decline of more than 0.9 percent. In the latest trading, the British pound recorded $1.2595 and is also heading for a weekly decline of approximately one percent.

There was little change in the dollar index, recording 103.67, and on its way to record a weekly rise of more than 0.4 percent. This would end weekly losses that continued for three weeks in a row, with the dollar trying to curb losses it suffered during a selling wave in November.

The Australian dollar rose 0.17 percent to $0.6613. In China, the yuan fell against the dollar and was on its way to ending a series of weekly gains that continued for three weeks in a row.