The yen rose to a roughly seven-month high against the dollar in European foreign exchange trading, with expectations of a Bank of Japan rate hike and speculation over the repatriation of funds providing the backdrop. The dollar fell as low as ¥154.05 before trading back around ¥154.40. The key focus this week is the US CPI release.
The yen surged to a roughly seven-month high against the dollar in European foreign exchange trading. Views that the Bank of Japan may accelerate the pace of monetary policy tightening, along with speculation that Japanese investors will repatriate funds, have improved the outlook for the yen.
The dollar fell as low as around ¥154.05 before trading near ¥154.40. At one point, it fell below the lows seen during the intervention, prompting a reassessment of fund flows surrounding the yen. Most of the post-intervention gains were erased.
A senior FX analyst at a Japanese bank said bullish sentiment toward the yen had strengthened after the dollar fell below ¥155, adding that a break below ¥155 could provide an additional catalyst for yen appreciation.
The euro rose 0.15% against the dollar to $1.1630, while dollar weakness also affected broader market trends. The most closely watched event this week is the US CPI report due on the 12th, which could influence the timing of the Federal Reserve's next rate hike.