The yen was parked by a 34-year low on the dollar and decade lows on other crosses ahead of a Bank of Japan meeting where interest rates are expected to stay low, while the dollar dipped elsewhere on softer-than-expected U.S. growth data.
That opened — at the 10 year tenor
The size and persistence of the yield gap has encouraging short yen positions and drives Japanese money into dollar assets such as Treasuries, weighing on the currency.
The yen has slipped past levels at 152 and 155 to the dollar where traders had been wary of pushback or intervention from officials and was last trading at 155.58 per dollar.
Japanese Finance Minister Shunichi Suzuki said on Friday he was closely watching currency moves and prepared to take full steps in response. Short yen positions hit their largest for 17 years last week.
On Thursday the yen made a near 16-year low of 167.06 per eurothe Aussie dollar
The Bank of Japan already hiked rates at a landmark meeting in March where it ended years of negative interest rates.
Market expectations are low for any fresh policy shift on Friday, but are keenly watching for changes to inflation projections — which would broadcast an intent to hike rates — or to any guidance on the interest rate outlook.
“The market is not pricing in much from this meeting but it’s important to watch where they set official inflation targets, and whether they revise their forecast,” said Nathan Swami, Citi’s Asia-Pacific head of FX trading in Singapore.
“I’m expecting them to, which then opens up the summer meetings as live.”