Yen Surges on Hike Bets as Dollar Index Stalls Ahead of Key Data

The Japanese yen has been on a strong run this week, with expectations of a Bank of Japan interest rate hike supporting its value. The currency strengthened to as high as 155.25 per dollar in morning trading and is now heading for a 2.5% weekly gain, its strongest performance since late July.

This comes ahead of the BOJ's September 17-18 meeting, where markets are reassessing the likelihood of further policy normalization. Japan's top currency diplomat Atsushi Mimura has stated that authorities remain alert to exchange-rate movements and are in regular contact with US officials, keeping the possibility of further intervention in focus.

The dollar index, which tracks the US currency against a basket of major currencies, remains little changed at 99.01 and is heading for a weekly decline of around 0.7%. Investors are awaiting US non-farm payrolls data later on Friday and inflation figures next week to gain clarity on the Federal Reserve's policy direction.