By Rae Wee
SINGAPORE (Reuters) -The yen rose after the Bank of Japan (BOJ) hiked rates on Friday and revised up its inflation forecasts, while the Australian and New Zealand dollars surged on U.S. President Donald Trump’s comments suggesting a softer stance on tariffs against China.
The BOJ raised rates by 25 basis points at the conclusion of its two-day policy meeting, in a move that had been well telegraphed by policymakers prior to the outcome.
The yen swung between losses and gains in choppy trade shortly after the decision, as traders weighed the implications of the non-unanimous vote against the BOJ’s higher price forecasts.
The Japanese currency later turned decisively higher and was up last up more than 0.5% to 155.23 per dollar.
“Dollar/yen went both ways likely in reaction to the non-unanimous vote, but it subsequently eased. The upward revision to CPI forecast also exudes a sense of confidence the policymakers have with regard to inflation and the economy meeting expectations,” said Christopher Wong, a currency strategist at OCBC.
Earlier on Friday, data showed Japan’s core consumer prices rose 3.0% in December from a year earlier to mark the fastest annual pace in 16 months.
Focus now turns to BOJ Governor Kazuo Ueda’s post-meeting briefing later in the day for further clues on the pace and timing of future rate hikes.
Elsewhere, the Australian and New Zealand dollars were riding high from Trump’s interview with Fox News aired on Thursday evening, where he said he would rather not have to use tariffs over China and that he thought he could reach a trade deal with the world’s second-largest economy.
The jumped more than 0.6% to reach a five-week top of $0.6324, while the similarly scaled a five-week peak of $0.57105.
The two Antipodean currencies are often used as liquid proxies for the .
“It’s still early days, although it looks like he prefers to negotiate with China first and perhaps come to a deal, rather than to use tariffs,” said Sim Moh Siong, a currency strategist at Bank of Singapore.
“If he goes down the route of holding back on tariffs but instead coming to a deal with China, then you could see more relief coming through in terms of the Asian currencies as well as the Aussie and the kiwi.”
The Chinese yuan similarly got a lift on the back of Trump’s remarks, with the onshore unit rising to its strongest level in six weeks at 7.2450 per dollar.
Its offshore counterpart also peaked at its highest since Dec. 11 at 7.2519 per dollar.
DOLLAR BLIP
In the wider market, the dollar fell broadly following Trump’s latest comments on China tariffs and was headed for its worst weekly fall in two months.
Investors have rushed to sell the dollar in the wake of Trump’s inauguration after his widely expected tariff announcements did not immediately materialise, unlike what he had threatened during his campaign.
The greenback extended losses from earlier in the session to fall 0.35% to 107.77 against a basket of currencies, and was set to lose 1.5% for the week.
“What you’re seeing right now in terms of the dollar pullback is a reflection that there’s been some tariff risk premium that’s been priced in the dollar, and now the market is pricing (that) out,” said Bank of Singapore’s Sim.
The euro, meanwhile, rose 0.32% to $1.0448 and was headed for a roughly 1.7% weekly gain, its best since November 2023.
Sterling advanced 0.38% to $1.2399 and was similarly poised for a rise of 1.9% for the week, snapping three straight weeks of losses.
Also adding to headwinds for the dollar were comments from Trump demanding that the Federal Reserve cut interest rates, arguing he understands monetary policy better than those charged with setting it.
“The Trump comments … are a reminder that we’re just going to have this constant source of volatility coming from off-the-cuff comments, and of course, it does on paper challenge a little bit of that Fed independence,” said Rodrigo Catril, senior FX strategist at National Australia Bank (OTC:).
Trump’s remarks come just days before the Fed’s first policy meeting to be held during his administration, with very broad expectations officials will leave rates unchanged.
In cryptocurrencies, bitcoin was last 0.8% higher at $103,963.80, while ether gained 1.56% to $3,299.39.
Trump on Thursday ordered the creation of a cryptocurrency working group tasked with proposing new digital asset regulations and exploring the creation of a national cryptocurrency stockpile, making good on his promise to quickly overhaul U.S. crypto policy.