The yen recovered from a seven-month low against the dollar as traders weighed a pull back in US yields against the expectation the Bank of Japan will keep policy unchanged Friday.
The Japanese currency strenghtened to the 140.20 per dollar level in early Tokyo trading, having weakened to 141.50 on Thursday. Overnight implied volatility in the yen, a gauge of expected swings, closed below levels seen before previous central bank meetings this year.
Treasury yields fell across the curve Thursday, a move which helped weaken the dollar and allow the yen some breathing space. But almost all of the economists surveyed by Bloomberg see the BOJ leaving its ultra loose policy unchanged Friday, something which may reignite the weakening pressure.
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