Yen firms; bitcoin hits new record

The Japanese Yen (JPY) edged up for a fourth straight session against the U.S. dollar in choppy trading on Monday, bolstered by an upward revision to Japan’s growth figures and expectations the Bank of Japan could exit negative rates at its policy meeting next week.

In cryptocurrencies, bitcoin soared to a fresh record high above $72,000 underpinned by a surge in inflows into new spot exchange-traded funds for the digital asset. Hopes that the Federal Reserve will soon cut interest rates have also lifted bitcoin, which was last up 5.3% at $72,074.

The dollar was at 147.07 yen, slightly down on the day.

A growing number of BOJ policymakers are warming to the idea of ending negative rates at their March 18-19 meeting, sources told Reuters, amid expectations for hefty pay rises from Japan’s biggest firms. Results of this year’s annual “shunto” wage negotiations are due on Wednesday.

At the same time, an upward revision to Japan’s economic growth last quarter meant the country avoided a technical recession, adding to the argument the economy could weather tighter policy.

“Yen remains one of the more volatile and interesting currencies this year…speculation on the BOJ’s movements next week keep boosting dollar/yen,” said Helen Given, FX trader, at Monex USA in Washington.

“Japan avoiding a recession last year is quite notable as well and will likely only add fuel to that fire.”

The dollar index rose 0.2% to 102.9, not far from the nearly two-month low of 102.33 reached on Friday when monthly payrolls figures signalled a cooling U.S. labor market, keeping the Fed on track to ease policy this year. The data did show downward revisions to January’s blowout number.

“(Fed Chair Jerome) Powell has said time and time again that the Fed has been looking for softening in the labor market, and it appears Friday’s release – though on the surface quite hot – might have shown the cracks necessary to move the needle earlier,” Given said.

Traders currently see June as most likely for the first cut, bets that could be moved by important consumer price index inflation data on Tuesday.

The euro slipped 0.2% to $1.0920 after jumping as high as $1.0980 on Friday for the first time since Jan. 12. The European Central Bank left rates at record highs last Thursday while cautiously laying the ground to lower them later this year.

Sterling dropped 1.1% against the dollar to $1.2817, after pushing to the highest since late July at $1.2890 on Friday amid bets the Bank of England will be slower to cut rates than the Fed or ECB. The British currency faces a test on Tuesday with the release of jobs and wage data.

Lee Hardman, currency analyst at Japanese bank MUFG, in a note to clients said the key data points for currencies this week are the two U.S. inflation prints – Tuesday’s consumer price index and Thursday’s producer price index.

“If inflation surprises to the upside again in February, it will be harder to judge it as just a bump in the road to slowing inflation, and provide more of a challenge to market expectations for the Fed to begin cutting rates in June,” he said.

The Australian dollar was down 0.4% at US$0.6601 after jumping last week as the U.S. dollar fell on the back of the slowdown in the labor market.