The Japanese yen was on course for its strongest week in more than a month on Friday, September 4, as traders increased bets that the Bank of Japan could raise interest rates while markets awaited the latest US jobs figures. ([investing.com](https://www.investing.com/news/economy-news/yen-headed-for-strongest-week-in-a-month-dollar-flat-ahead-of-payroll-data-4888753))
The yen strengthened to ¥155.25 against the dollar in morning trading before easing back to around ¥155.71. It was heading for a weekly gain of about 2.5 per cent, its biggest advance since late July.
Analysts said the move appeared to reflect growing confidence that the Bank of Japan may adopt a more hawkish approach at its policy meeting on September 17 and 18, rather than simply being the result of traders closing short positions.
“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 in Tokyo.
Japan’s top currency diplomat, Atsushi Mimura, said he remained alert to movements in exchange rates and was in regular contact with US officials. His comments kept alive the possibility of further official intervention to support the yen.
The dollar index, which measures the US currency against a basket of major peers, was broadly flat at 99.01. It was on track to record a weekly decline of roughly 0.7 per cent, while sterling stood at $1.3527 and the euro at $1.1625.
Investors were turning their attention to the US non-farm payrolls report, due later on Friday, for clues about the Federal Reserve’s interest-rate plans. The Bureau of Labor Statistics scheduled the August employment report for release at 8.30am Eastern Time. ([bls.gov](https://www.bls.gov/newsroom/?utm_source=openai))
Federal Reserve governor Christopher Waller said on Thursday that he would be inclined to keep interest rates unchanged at this month’s meeting if incoming inflation data showed continued moderation, although he left open the possibility of a rate rise if price pressures intensified. ([federalreserve.gov](https://www.federalreserve.gov/newsevents/speech/waller20260903a.htm?utm_source=openai))
Markets subsequently reduced the probability assigned to a September rate increase to about 50 per cent. The Federal Open Market Committee is due to meet on September 15 and 16, shortly before the Bank of Japan’s policy decision. ([federalreserve.gov](https://www.federalreserve.gov/newsevents/speech/waller20260903a.htm?utm_source=openai))
