Yen Surges on Hawkish Rate Hike Bets Ahead of Payroll Data

The Japanese yen is on track for its strongest week in over a month as traders bet on an interest rate hike from the Bank of Japan. The currency strengthened to 155.25 per US dollar in morning trade, just off the 155.20 high it hit last month after a joint intervention by Japan and the US.

Market analysts say the yen's gains reflect bets that the BOJ may be more hawkish than expected when it meets on September 17-18. 'This feels less like a short squeeze and more like the market cautiously reassessing a more hawkish BOJ path,' said Masahiko Loo, senior fixed income strategist at State Street Investment Management.

The dollar index was flat at 99.01 ahead of key data releases, including nonfarm payrolls later this week and CPI inflation next week. The greenback is on track for a 0.7% weekly decline.