Yen Soars to Strongest Week in Over a Month Amid Hawkish Rate Hopes

The Japanese yen has been gaining strength against the US dollar, and is now on track for its strongest week in over a month. The currency's gain reflects bets that the Bank of Japan could be more hawkish than previously expected when it meets next week to discuss interest rates.

According to Masahiko Loo, senior fixed income strategist at State Street Investment Management in Tokyo, 'This feels less like a short squeeze and more like the market cautiously reassessing a more hawkish BOJ path.'

The yen's gain has been significant, with it strengthening to as much as 155.25 per dollar on Friday, just off its high of 155.20 hit last month after the July intervention.

Meanwhile, Japan's top currency diplomat Atsushi Mimura said he remains alert to exchange-rate moves and is in constant contact with US authorities, keeping markets alert to the chance of another yen-buying intervention.