Investing.com - The dollar ended the week within striking distance of eight-year highs against the yen on Friday as heightened expectations for higher U.S. interest rates underpinned investor demand for the greenback.
USD/JPY was at 121.38 late Friday, not far from the eight-year highs of 121.40 reached on Tuesday.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, advanced 1.22% to 100.32 late Friday, a level last reached in April 2003, boosted by weakness in the euro.
EUR/USD hit fresh 12-year lows of 1.0462 on Friday, before pulling back to 1.0496 in late trade, still down 1.31% for the day.
The single currency had already weakened broadly this year after the European Central Bank unveiled a trillion-euro quantitative easing program in January. The euro turned sharply lower after the bank started asset purchases on Monday, pushing euro area bond yields to new lows.
Lower bond yields make the single currency less attractive to investors at a time when expectations are mounting that the Fed could start rising interest rates mid-year.
The Bank of Japan expanded it stimulus program in late October amid concerns that falling oil prices could lower the inflation outlook.
Elsewhere, the euro fell to a 20-month low against the yen, with EUR/JPY hitting lows of 126.91 before easing back to 127.36 at the close.
In the week ahead, investors will be focusing their attention on Wednesday’s Federal Reserve policy statement to see if it would drop its reference to being patient before raising rates. A central bank meeting in Japan will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, March 16
The U.S. is to produce reports on industrial production and manufacturing activity in the New York region, as well as private sector data on the housing market.
Tuesday, March 17
The Bank of Japan is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.
The U.S. is to report on building permits and housing starts.
Wednesday, March 18
Japan is to publish data on the trade balance.
The Fed is to announce its federal funds rate and publish its rate statement, which outlines economic projection and the factors affecting the monetary policy decision. Fed Chair Janet Yellen is to hold what will be a closely watched a post-policy meeting press conference.
Thursday, March 19
The U.S. is to release reports on jobless claims, the current account and manufacturing activity in the Philadelphia region.
Friday, March 20
The BoJ is to round up the week with the minutes of its latest monetary policy meeting.