Investing.com - Upbeat U.S. retail sales and consumer sentiment reports sent the dollar gaining over the yen on Friday as markets bet the Federal Reserve will trim its monthly bond-buying program at a policy meeting next week.
In U.S. trading, USD/JPY was 0.17% at 107.28, up from a session low of 106.97 and off a high of 107.40.
The pair was expected to test support at 104.67, last Friday's low, and resistance at 108.0, the high from Sept. 19, 2008.
The Thomson Reuters/University of Michigan preliminary consumer sentiment index rose to a 14-month high of 84.6 this month from 82.5 in August. Analysts had expected the index to rise to 83.3 in September.
The report came after official data showed that U.S. retail sales rose 0.6% last month, in line with expectations. Retail sales for July were revised to a 0.3% gain from a previously estimated flat reading.
Core retail sales, which exclude automobiles, increased by 0.3% in August, also in line with market expectations and growing at the fastest pace since April. July's figure was revised to a 0.3% gain from a previously estimated 0.1% rise.
Friday's data fueled already growing expectations that the Federal Reserve will hike interest rates earlier than markets were expecting, with tightening seen taking place now in mid-2015, while many expect the U.S. central bank to trim its close its bond-buying program in October.
A study released by the San Francisco Feb on Monday indicated that central bank officials see rates rising sooner than markets expect.
The yen remained in negative territory after BoJ Governor Haruhiko Kuroda said Thursday monetary authorities would be prepared to immediately loosen monetary policy or implement other measures if its 2% inflation target becomes difficult to meet.
Earlier this week official data showed that Japan’s second quarter economic contraction was larger than initially estimated, and another report showed that the country’s current account surplus fell short of expectations in July.
The lackluster data indicated the economy is struggling to gain momentum and fuelled expectations for more stimulus from the Japanese central bank.
The yen, meanwhile, was down against the euro and down against the pound, with EUR/JPY up 0.40% at 138.96, and GBP/JPY trading up 0.15% at 174.18.