Yen retreats from 2.5-month high, dollar faces third straight weekly drop
The yen retreated on Friday after reaching a 2-1/2 month high following a surge in Japanese inflation, while the dollar was on track for its third consecutive weekly decline.
Traders have assessed that the start of Donald Trump's second term has largely been marked by rhetoric on tariffs rather than substantial policy changes, News.Az reports, citing Reuters.
The yen broke through chart resistance at 150 per dollar overnight and strengthened as far as 149.285 per dollar, and Japanese government bonds were sold off after national core inflation hit a 19-month peak in January, buoying expectations for more interest rate increases in Japan.
But the yen pulled back sharply and bond yields declined after Bank of Japan (BOJ) chief Kazuo Ueda said the central bank could step up government bond buying if long-term interest rates jump.
The euro was up 0.8% overnight and steadied in Asia around $1.0493, with traders awaiting an election in Germany on the weekend where polls point to a conservative coalition win.
The dollar nursed broad losses as bulls who had built up big long positions in anticipation of a trade war have backed off while Trump equivocates about tariffs.
Trump has slapped an additional 10% tariff on Chinese goods and announced plans to reimpose steel and aluminium levies from his first term, but suspended threatened tariffs on Canada and Mexico while numerous others remain - as of yet - only threats.
The yen has gained around 3.2% on the dollar through February so far. Another quarter-basis point rate hike isn't fully priced in until September, although interest rate markets have factored in a slight chance of a hike as soon as May .
But the Japanese currency tumbled in the wake of BOJ Governor Ueda's bond buying remarks to as low as 150.73 per dollar before paring some losses. The dollar was last up 0.58% at 150.51 yen.
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