The Yen strengthened on Friday after the Bank of Japan (BOJ) raised interest rates and upgraded its inflation forecasts.
The BOJ increased rates by 25 basis points at the end of its two-day policy meeting, a decision that had been widely anticipated by policymakers ahead of the announcement.
The Yen fluctuated between losses and gains in volatile trading following the decision but later gained momentum, turning decisively higher. It was up 0.4% at the time of writing, trading at 155.43 per Dollar.
“Dollar/Yen went both ways likely in reaction to the non-unanimous vote, but it subsequently eased. The upward revision to CPI forecasts also exudes a sense of confidence the policymakers have with regard to inflation and the economy meeting expectations,” said OCBC currency strategist, Christopher Wong
Previously on Friday, data revealed that Japan's core consumer prices climbed 3.0% in December compared to last year, marking the fastest annual increase in 16 months, Reuters reports.
Meanwhile, the Australian and New Zealand Dollars surged following an interview with President Trump on Fox News on Thursday.
Trump expressed a preference to avoid using tariffs against China and shared optimism about reaching a trade deal with the world's second-largest economy.
The Australian Dollar rose over 0.6%, hitting a five-week high of $0.6324, while the New Zealand Dollar also reached a five-week peak at $0.57105.
“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,” according to 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 also received a boost from Trump's comments, with the onshore Yuan climbing to a six-week high of 7.2381 per Dollar. Similarly, the offshore Yuan hit its highest level since 11th December, reaching 7.2404 per Dollar.