The yen got a boost on Thursday on expectations that the Bank of Japan will review the side effects of its monetary easing, while the dollar slipped and wobbled near a seven-month low against the euro ahead of U.S. inflation data later in the day.
The Japanese yen surged roughly 0.8% to a session high of 131.385 per dollar in Asia trade, following a Yomiuri report that the BOJ will review the side effects of its monetary easing at next week's policy meeting and may take additional steps to correct distortions in the yield curve. The yen last bought 131.50 per dollar.
The news follows the BOJ's surprise tweak in December to its bond yield control, though the move has failed to address distortions caused in the bond market from the central bank's massive bond buying.
"The report is likely to add to the (yen) optimism," said Saktiandi Supaat, regional head of FX research and strategy at Maybank.
"The upcoming BOJ meeting ... expectations of upward revisions to the bank's inflation forecast and the forthcoming announcement of a new BOJ governor, will likely feed into the expectation of a policy shift."
Sterling gained 0.15% to $1.2169, while the euro was last 0.11% higher at $1.0769, after rising to a seven-month peak of $1.07765 in the previous session.
The U.S. dollar index fell 0.07% to 103.05, not far off its seven-month low of 102.93 hit earlier in the week.
