Against the Japanese yen, the dollar has been slowly inching
up in recent days after it fell more than 3% last week, its biggest weekly
percentage drop since early December 2022.
But the yen found some support in the BOJ's summary of
opinions released on Thursday, which showed board members were overwhelmingly
hawkish at their April policy meeting with many calling for steady interest
rates hikes.
The "BOJ appears to be hinting at the next rate hike,
which could come in June or July as final results of wage negotiations come
out," said Charu Chanana, head of currency strategy at Saxo.
The yen's pop higher was brief, however, with the market
decidedly bearish on the currency.
Last week's Fed policy meeting and downside surprise in U.S.
job growth have markets increasing bets for two rate cuts this year. But a
chasm remains between Japan's ultra-low yields and those in the United States.
"The market is not really worried about the sudden turn
by the Fed. So in this sense, the market is biased for the upside for
dollar/yen," said Masafumi Yamamoto, chief currency strategist at Mizuho
Securities.
With traders still wary of possible currency intervention by
Tokyo, however, dollar/yen will likely stay locked in the 155-160 range, he
added.
Market players suspect Tokyo spent some $60 billion last
week to stem the yen's slide after it hit its weakest in 34-years against the
dollar around 160 yen.
Japan's top currency diplomat Masato Kanda on Thursday
reiterated a warning that Tokyo is ready to take action in the currency market.
The Japanese yen was mostly flat at 155.57 per greenback.
RATE PATHS IN FOCUS
Market focus will soon swing to the April U.S. producer
price index (PPI) and the consumer price index (CPI) out next week, which
traders will watch for signs that inflation has resumed its downward trend
toward the Fed's 2% target rate.
"This is a make-or-break report for the Fed, as another
print questioning the disinflation narrative can put their credibility at
risk," Saxo's Chanana said.
Fed Bank of Boston President Susan Collins said overnight
that the U.S. economy needs to cool to return inflation back to target.
The dollar index, which measures the greenback against a
basket of currencies, was unchanged at 105.51.
Sterling was steady at $1.24975 ahead of the Bank of
England's policy decision later on Thursday.
The BOE is likely to take another step towards its first
interest rate cut in four years as inflation falls.
The big question for investors is whether the BOE suggests
that a cut could come in June - when the European Central Bank has already
signalled it will reduce borrowing costs.
The euro held at $1.0748.
Elsewhere, China's offshore yuan was marginally higher at
7.2257, after data revealed China's exports and imports returned to growth in
April after contracting in the previous month.
That could mean a potential delay for rate cuts some
believed China would need to make to meet its 2024 GDP goal.
In cryptocurrencies, bitcoin last rose 0.09% to $61,618.12. Reuters