Dollar Roars Against Yen as BOJ's Rate Hike Fails to Impress

The US dollar surged against the yen on Friday after two policymakers at the Bank of Japan (BOJ) dissented from a widely expected decision to raise interest rates, casting doubt among traders about the likelihood of further hikes.

The BOJ voted 7-2 to hike interest rates by 25 basis points, pushing them to their highest level in 31 years at 1.25%. However, the move did not boost the Japanese currency as traders felt there was a lack of explicitly hawkish guidance.

Steven Englander, head of G10 FX research at Standard Chartered, said: '(The) lack of hiking punch makes it easier for USD to go higher.' The dollar index, which tracks the currency against six major peers, was up 1.2% for the week to around a seven-week high.

The BOJ's decision came on the heels of the Fed's hawkish message from earlier this week. Traders see a roughly 55% chance of a quarter-point hike at the Fed's next two-day meeting next month, up from 27% a week ago, according to the CME Group's FedWatch tool.