Yen Soars on Hawkish Rate Hike Bets as Dollar Holds Steady Ahead of Payroll Data

The Japanese yen has been on a two-day rally against the U.S. dollar, but it's still heading for its strongest week in more than a month.

This surge is largely due to bets that the Bank of Japan could be more hawkish than expected when it meets on September 17-18.

Atsushi Mimura, Japan's top currency diplomat, said he remains alert to exchange-rate moves and is in constant contact with U.S. authorities, keeping markets on high alert for another yen-buying intervention.

Ray Attrill, head of FX strategy at National Australia Bank, believes the market is getting jittery about potential interventions and warns that unless there are significant policy surprises or more aggressive intervention by the U.S. Federal Reserve, a sustained move below 155 per dollar is unlikely in the coming weeks.