Investing.com - The dollar rallied over 1% against the yen on Friday, to trade near seven-year highs after the Bank of Japan surprised markets by unexpectedly introducing further easing measures.
USD/JPY hit 111.29 during late Asian trade, the pair's highest since January 2008; the pair subsequently consolidated at 111.38, jumping 1.99%.
The pair was likely to find support at 109.18, the session low and resistance at 112.05.
The yen came under broad selling pressure after the BOJ said it would raise its monetary base target to an annual increase of ¥80 trillion from ¥60-70 trillion in order to increase the chances of approaching its inflation goal.
Adding to pressure, a Japanese government panel overseeing the Government Pension Investment Fund approved plans on Friday for the fund to raise its holding of foreign stocks to 25% of its portfolio from 12%.
Earlier Friday, official data showed that household spending in Japan rose 1.5% in September, disappointing expectations for an increase of 1.9%, after a 0.3% slip the previous month.
Year-on-year, household spending fell 5.6% last month, more than the expected 4.3% decline, after a 4.7% drop in August.
Data also showed that Tokyo's consumer price inflation rose at an annualized rate of 2.5% this month, missing expectations for a 2.7% rise, after an increase of 2.9% in September.
Tokyo's core CPI, which excludes fresh food, rose at an annualized rate of 2.5% in October, in line with expectations and down from 2.6% the previous month.
Meanwhile, the greenback strengthened on signs the U.S. economic recovery is on track after the Commerce Department reported that U.S. gross domestic product grew at an annual rate of 3.5% in the three months to September, beating forecast for 3%.
But consumer spending slowed to 1.8% from 2.5% in the second quarter, and fixed investment spending also declined from the previous quarter, pointing to slackening domestic demand.
A separate report showed that the number of Americans filing new claims for jobless benefits rose for a second week last week, but underlying trends still pointed to a recovery in the labor market.
The yen was also sharply lower against the euro, with EUR/JPY climbing 1.48% to 139.81.
Later in the day, the U.S. was to release data on personal income and expenditure as well as revised data on consumer sentiment and a report on business activity in the Chicago region.