Investing.com - The yen weakened against its main counterparts on Monday as the diverging monetary policy outlook between the Bank of Japan and central banks in Europe and the U.S. pressured the currency lower.
USD/JPY was up 0.25% at 114.20 by 08.28 AM ET, after rising as high as 114.3 earlier, its highest level since May 11.
In a speech on Monday, BoJ Governor Haruhiko Kuroda reiterated that the bank is resolved to keep its stimulus program in place until inflation is in line with its 2% target.
The remarks underlined the divergent monetary policy outlook between the BoJ, the Federal Reserve and the European Central Bank, which appears to be getting ready to join the Fed in tightening monetary policy.
Demand for the dollar continued to be underpinned after a stronger-than-forecast U.S. jobs report indicated that the Federal Reserve would stick to plans for a third rate hike this year.
The rapid pace of jobs growth reassured investors that the economy is on a strong enough footing to justify the Fed’s plans to raise interest rates once more this year.
The Fed hiked rates at its June meeting and stuck to its forecast for one more rate hike this year, but concerns over subdued inflation outlook had raised doubts over whether officials would be able to stick to their planned tightening path.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, edged up 0.09% to 95.87.
EUR/JPY was at 130.06 after touching a high of 130.38 earlier, the most since February 2016.
Late last month comments by ECB President Mario Draghi appeared to open the door to monetary policy adjustments, fueling speculation the bank could start to scale back its stimulus program as soon as September.
Last week’s minutes of the ECB June meeting showed that officials discussed removing the easing bias from its latest monetary policy statement, before deciding against it.
The euro was fractionally lower against the dollar, with EUR/USD dipping to 1.1392.