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 messages countered the Bank of Japan's caution to further policy.
The yen traded at 157.725 per dollar at 0030 GMT, up 0.1% from Thursday, but close to a session low of 158.09 per dollar, the yen's weakest since July 17.
A summary of comments from the BOJ's December policy meeting, released Friday, showed that some officials are more confident about a near-term rate hike, while others remain cautious amid uncertainty about the wage path and policies of the incoming Donald Trump administration.
Inflation data from Tokyo for December, released on Friday, were supportive of rising prices.
BOJ Governor Kazuo Ueda said last week that, after the central bank held rates steady, it would take “a lot of time” to fully stabilize wages and the economy overseas, particularly in the United States.
In contrast, Fed Chairman Jerome Powell said earlier this month that US central bank officials “will be cautious about further tapering” following the expected quarterly rate cut.
The Trump administration's proposed tax cuts, tax increases and increased immigration are seen as growth and inflation by economists.
The dollar is on track to gain 5.4% this month against the yen, with 11.9% annual progress.
“The uptrend is strong, but there is a feeling that the strong-yen-weak-dollar movement that we have seen is now over and there is a risk of a pullback,” Mizuho (NYSE:) securities analysts Masafumi Yamamoto and Masayoshi Mihara wrote in a client note.
“There are also strong intervention warnings from Japanese officials.”
On Dec 20, both Japan's finance minister and their top FX ambassador said in separate press conferences that officials were alarmed by the “excessive” currency flows and were ready to take “appropriate action”.
The , which measures the currency against the yen, euro, sterling and three other major rivals, was stable at 108.09 and has basically been in a holding pattern around that level all week. For the month, it increased by 2.2%.
Many retailers are on vacation around Christmas and New Years.
The euro was flat at $1.0421, down 1.5% so far in December. Sterling was little changed at $1.25275 on the day, and is down 1.7% for the month.
The leading cryptocurrency bitcoin was stable at $95,660, dropping 1.2% this month, but after touching a record high of 108,379.28 on Dec. 17. It's up about 125% so far this year.