The yen appreciated on Thursday, approaching a four-month high it reached this week against the dollar, after an unexpected change in the Bank of Japan’s bond yield controls boosted bullish bets on the yen.
The yen rose 0.4 percent to 131.99 per dollar. On Tuesday it had hit a four-month high of 130.58, after the Bank of Japan decided to allow the yield on 10-year bonds to move 50 basis points on either side of its 0% target, a wider band than the previous one of 25 basis points.
The greenback, which had risen 0.6% against the yen in the previous session, failed to regain much of the 3.8% it lost after Tuesday’s news.
Against the euro, the yen stabilized at 140.56 while trading at 159.61 per pound. The yen was approaching its highest level against both currencies since late September.
The dollar weakened as confidence in risk assets rebounded after U.S. consumer confidence hit an eight-month high in December on Wednesday as inflation retreated and the labor market remained strong.
*The Dollar Index, which measures the greenback’s performance against a basket of six currencies, including the yen, fell 0.5 percent to 103.75, its lowest level in a week.
The euro rose 0.4 percent to $1.0649 after ECB officials said they favored further rate hikes.
Sterling rose 0.2% to $1.2109, partially reversing Wednesday’s 0.85% decline.
Britain’s economy contracted slightly more than initially estimated in the third quarter and business investment performed poorly, the Office for National Statistics said on Thursday.
*The Chinese yuan in international markets it rose slightly to 6.9828 units per dollar, although confidence remains weighed down by the spread of COVID-19 throughout the country.