The yen had the biggest monthly loss since January versus the dollar on speculation that the fastest Japanese inflation in 15 years will lead Prime Minister Shinzo Abe to press on with unprecedented stimulus measures.
The yen strengthened to a five-week high against the dollar as the partial shutdown of the U.S. government showed no signs of ending, fueling speculation there will be another standoff over raising the debt ceiling.
Intervention by the Bank of Japan today may not change market fundamentals enough to weaken the yen, according to Derek Halpenny, European head of currency research at Bank of Tokyo-Mitsubishi UFJ Ltd. in London.
The euro strengthened the most in two weeks against the dollar after European Central Bank President Mario Draghi refrained from signaling that additional measures were needed to boost the region’s recovery.
The pound rose toward an eight- month high against the dollar after Bank of England Governor Mark Carney told a U.K. newspaper he saw no case for further asset purchases as the recovery has gained traction.
The dollar headed for weekly gains versus all 16 of its major counterparts before a U.S. report that analysts said will show the jobless rate declined last month, adding to signs the economy is gaining momentum.
The dollar will rise to a level against the euro last reached in September as U.S. economic growth picks up and expectations for central bank rate increases elsewhere wane, according to Bank of Tokyo-Mitsubishi UFJ Ltd.
The yen rallied from near its weakest level in almost seven months against the dollar after Bank of Japan Governor Masaaki Shirakawa said the opposition party’s proposals to weaken the currency are unrealistic.