The yen firmed towards its recent four-month peak against the dollar on Thursday, after the Bank of Japan’s surprise tweak to its bond yield control earlier this week provided a catalyst for trade in an otherwise dull week ahead of year-end holidays.
The yen was about 0.3% higher at 132.05 per dollar, after surging to a four-month high of 130.58 on Tuesday in the aftermath of the BOJ’s decision to allow the 10-year bond yield to move 50 basis points either side of its 0% target, wider than the previous 25 basis point band.
The greenback, which rose 0.6% against the yen in the previous session, had failed to meaningfully recoup its 3.8% slump following Tuesday’s news.
“The BOJ opened the door, obviously, for further unwinding of its super-loose policies,” said Sean Callow, a senior currency strategist at Westpac.
“It’s a case of what’s the price action on the yen? Do people want to try to keep pounding at (dollar/yen), having absorbed the shock of Tuesday?”
Against the euro, the yen steadied at 140.27, while trading at 159.73 per pound. Both pairs were holding close to roughly three-month peaks hit on Tuesday.