Investing.com - The dollar shot up against the yen on Friday after the Bank of Japan surprised global markets by expanding its monetary stimulus program to ward off deflationary threats.
In U.S. trading, USD/JPY was up 2.60% at 112.05, up from a session low of 109.18 and off a high of 112.48.
The pair was expected to test support at 109.18, the session low, and resistance at 112.48, the session.
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, a preemptive move to steer the economy away from deflationary decline while improving the chances of reaching inflation goals.
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%.
Friday's changes to Japanese monetary policy caught many investors off guard and sent the dollar soaring over the yen.
Elsewhere, 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.
Strong data out of the U.S. also bolstered the greenback.
The Thomson Reuters/University of Michigan final consumer sentiment index rose to a seven-year high of 86.9 this month from 86.4 in September. Analysts had expected the index to remain unchanged.
In addition, industry data showed that the Chicago purchasing managers' index rose to a three-and-a-half year high of 66.2 in October from 60.5 in September, confounding expectations for a reading of 60.0.
The reports overshadowed earlier data showing that personal spending fell 0.2% last month, disappointing expectations for a 0.1% rise, after an increase of 0.5% in August.
U.S. personal income rose 0.2% in September, less than the expected 0.3% gain, after a 0.3% advance the previous month.
Separately, the yen was down against the euro and down against the pound, with EUR/JPY up 1.88% at 140.36, and GBP/JPY trading up 2.67% at 179.42.