SINGAPORE - The yen strengthened on Monday as comments from Bank of Japan Governor Kazuo Ueda stoked hopes that Japan could soon herald a new era away from negative rates, while the dollar was on the back foot ahead of this week's U.S. inflation reading.
The yen has come under immense pressure against the dollar as a result of growing interest rate differentials with the United States, since the Federal Reserve began its aggressive rate-hike cycle last year while the BOJ remains a dovish outlier. The euro rose 0.13% to $1.0714, after having ended Friday with an eight-week losing streak. Sterling edged 0.16% higher to $1.2486.
The dollar, along with U.S. Treasury yields, had surged last week after a run of resilient economic data added to bets that further rate hikes from the Fed may be on the horizon."The overall global economy is not booming, but neither is it on the verge of recession, and the U.S. appears to be doing the best among the major economies," said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.