Yen Strengthens Amid Expectations of BOJ Rate Hike

The yen is on course for its strongest weekly performance in over a month, fueled by expectations of a rate hike by the Bank of Japan. Traders anticipatively priced an 80% chance of a hike next week amidst positive economic indicators. The dollar, in contrast, is facing pressure.

The yen is poised for its strongest weekly performance in over a month, with speculation rising that the Bank of Japan (BOJ) will raise interest rates next week. This expectation places the dollar on a weaker footing as traders price in an 80% chance for a rate hike.

Market confidence has surged due to positive remarks from BOJ officials and data indicating persistent price pressures and robust wage growth. Despite a temporary setback to 155.40 yen per dollar, the currency remains close to a one-month high. Charu Chanana of Saxo suggests the BOJ could hike rates further.

Meanwhile, China's economy showed a surprise 5.4% growth in the fourth quarter, yet struggles to gain steady momentum. U.S. inflation and retail sales data add to the complex global economic outlook. Investors await Trump's upcoming policy indicators which may influence inflationary pressures.

(With inputs from agencies.)