Investing.com - The dollar rose to fresh six-year peaks against the weaker yen on Friday as expectations that the Federal Reserve will raise U.S. interest rates more quickly than expected continued to fuel investor demand for the dollar.
USD/JPY was last up 0.34% to 109.06 after rising as high as 109.46 earlier in the day, the most since August 2008. For the week, the pair added 1.61%.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, ended Friday’s session up 0.63% to 84.93, the highest level since July 2013, capping its tenth consecutive week of gains.
The dollar has rallied in the past two months as economic data indicated that the U.S. recovery is progressing strongly, while growth in Japan appears to be faltering.
On Wednesday the Federal Reserve offered fresh guidance on its plans to raise interest rates, underlining the diverging policy stance between it and the Bank of Japan, which looks likely to stick to a looser policy stance.
The Fed statement reiterated that it expects rates to remain on hold for a "considerable time", after its bond purchasing program ends, but it outlined in more detail how it will start to raise short term interest rates when the time comes.
The Fed also cut its monthly asset purchase program by another $10 billion, keeping the program on track to finish next month.
The yen remained under heavy selling pressure amid expectations that the faltering recovery in Japan will prompt the BoJ to implement additional stimulus measures to shore up growth.
Earlier this month BoJ Governor Haruhiko Kuroda said the bank would be prepared to immediately loosen monetary policy or implement other measures if its 2% inflation target becomes difficult to meet.
Elsewhere, the yen was higher against the euro late Friday, with EUR/JPY down 0.37% to 139.95, off the four month highs of 141.20 struck earlier in the session.
EUR/USD was down 0.71% to 1.2830 in late trade, the lowest level since July 2013.
The week ahead will bring a fresh look at the U.S. housing sector, with reports on both new and existing home sales, as well as Thursday’s data on durable goods orders and initial jobless claims.
Friday’s report on Japanese consumer prices will also be closely watched.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, September 22
The U.S. is to release private sector data on existing home sales.
Tuesday, September 23
Markets in Japan are to remain closed for a national holiday.
Wednesday, September 24
The U.S. is to publish data on new home sales.
Thursday, September 25
The U.S. is to release reports on durable goods orders and initial jobless claims.
Friday, September 26
Japan is to release data on consumer price inflation, which accounts for the majority of overall inflation.
The U.S. is to round up the week with revised data on gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health. The U.S. is also to release revised data on consumer sentiment.