Yen Surges Ahead of BOJ Rate Decision Amid Intervention Fears

The Japanese yen is experiencing its strongest week in more than a month, despite turning lower against the US dollar on Friday. The currency strengthened to as much as 155.25 per dollar in morning trade but retreated to a low of 156.45, down 0.4%. This week's gain of 2.2% marks the yen's biggest weekly increase since late July when Japan and the US conducted a joint intervention to halt its decline.

The sudden jump in the yen reflects bets that the Bank of Japan may be more hawkish than expected at its September 17-18 meeting, according to analysts. This has raised concerns about another potential intervention by the BOJ or the US Federal Reserve on behalf of the yen.

JPMorgan warns that an unwinding of an estimated 16 trillion-17 trillion yen in yen shorts could send the dollar to a 142-146 range against the Japanese currency. Meanwhile, traders are awaiting key data releases ahead of the Federal Reserve meeting, including nonfarm payrolls and CPI inflation next week.