The dollar extended a one-week high against the yen on Thursday, lifted by strong U.S. bond yields, but the rise was limited ahead of a Bank of Japan policy decision and a news conference by the BOJ governor.
USD/JPY rose to 113.64 overnight, rising past yesterday’s high of 113.47, its strongest level since mid-December. A jump above last week's high of 113.75 would see the greenback trade at its highest level in more than a month.
Market analysts say the dollar is being buoyed by the U.S.10-year Treasury yield, which soared to a nine-month high on Wednesday. Investors grew concerned whether the tax cuts would lead to higher U.S. debt, increased bond issuance, and more aggressive rate hikes by the Fed.
The Republican-controlled U.S. House of Representatives gave the final seal to the biggest overhaul of the U.S. tax code in 30 years on Wednesday, sending a sweeping $1.5 trillion bill to President Donald Trump for his signature.
German bond yields rose giving a lift to the euro. EUR/USD rose to 1.1882, climbing more than 1 percent so far, this week.
EUR/JPY jumped to 134.87, breaking Wednesday’s high of 134.76, its strongest level against since October 2015.
The Bank of Japan is widely expected to keep its short-term interest rate target at minus 0.1 percent at its policy decision due out later Thursday and pledge to guide 10-year bond yields around zero percent.
