LONDON: The dollar extended gains against the yen on Friday on increased prospects of more easing by the Bank of Japan, while the Aussie stood tall after catching a lift from upbeat employment data.
The greenback was up 0.2 percent at 120.82 yen after scaling a 10-day high of 121.38 overnight. The dollar was headed for a 1.5 percent weekly gain.
The U.S. currency coasted on a boost received Thursday on a media report quoting Japanese ruling party lawmaker Kozo Yamamoto as saying that the Bank of Japan’s Oct. 30 policy meeting would be a “good opportunity” for further monetary easing.
This was not the first time the outspoken Yamamoto, an adviser to Japanese premier Shinzo Abe, has openly expressed his views on monetary policy. But the timing appears to have struck a cord in the markets which have recently seen a soft Japanese data and equities engulfed in volatility.
“Foreign market participants’ views on the yen hinge on whether the BOJ will ease further or not, and such comments from an official naturally spark selling of the yen,” said Daisuke Karakama, market economist at Mizuho Bank in Tokyo.
“But we also need to keep in mind that the Abe administration may not exactly welcome further easing right now, as that could cause the yen to depreciate and depress real wages,” he said.
The yen was also on the defensive against the euro. The common currency rose to a two-week high of 136.45 yen, having gained 2.7 percent so far this week.
The euro was firm at $1.1248 and on track for a 1.3 percent weekly rise.
The Australian dollar was steady at $0.7067 after surging 0.8 percent overnight.
The Aussie sank after suffering collateral damage early on Thursday as the New Zealand dollar plummeted on easing by the Reserve Bank of New Zealand (RBNZ), but it struck a 9-day peak of $0.7100 later in the day as focus shifted to the much better-than-expected August Australian employment data.
A 1.2 percent overnight jump in offshore yuan against the dollar, after suspected rare intervention by Chinese state-owned banks, also provided a lift to the Australian dollar – often used as a liquid proxy for China plays.
