By Kevin Buckland
TOKYO (Reuters) – The yen hovered near a five-month low against the dollar on Friday, as the U.S. Federal Reserve’s hawkish message contrasted with the Bank of Japan’s cautious approach to further tightening monetary policy.
The yen was trading at 157.725 per dollar at 0030 GMT, up slightly 0.1% from Thursday but still near this session’s low of 158.09 per dollar, the yen’s weakest since March 17 .July.
A summary of opinions from the BOJ’s December meeting released on Friday showed some officials growing more confident about a near-term interest rate hike, while others remained cautious amid uncertainties over wage trends and the policies of the new Donald Trump administration.
Tokyo December inflation data, also released on Friday, supported further rate hikes.
BOJ Governor Kazuo Ueda said last week after the central bank kept interest rates steady that it would take “significant time” to fully assess the outlook for wages and foreign economies, particularly the United States.
In contrast, Fed Chairman Jerome Powell said earlier this month that after the expected quarter-point rate cut, U.S. central bank officials “will be cautious about further rate cuts.”
Trump’s proposed looser regulations, tax cuts, tariff increases and stricter immigration policies are seen by economists as both growth-boosting and inflationary.
The dollar is expected to gain 5.4% against the yen this month and gain 11.9% this year.
“The uptrend is strong, but there is a feeling that the strong dollar-weak-yen move we have seen so far is overdone and there is a risk of pullbacks.” Mizuho (NYSE:) securities analysts Masafumi Yamamoto and Masayoshi Mihara wrote in a note to clients.
“There is also the possibility of more severe intervention warnings from Japanese officials.”
On December 20, both Japan’s finance minister and its top foreign exchange diplomat said at separate media briefings that officials were alarmed by “excessive” currency movements and were ready to take “appropriate measures.”
The , which measures the currency against the yen, euro, pound sterling and three other major rivals, was steady at 108.09 and has been essentially in a holding pattern around that level all week. For the month it is up 2.2%.
Many retailers take vacation around Christmas and New Year.
The euro was flat at $1.0421, down 1.5% so far in December. Sterling was little changed at $1.25275 on the day, down 1.7% for the month.
Leading cryptocurrency Bitcoin was steady at $95,660, down 1.2% this month but after hitting a record high of 108,379.28 on December 17. So far this year it is up about 125%.
