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Forex pairs in this Article » USD/JPY (London) - The US dollar has extended gains against the yen on diverging monetary expectations and improving US economic forecasts.

USD/JPY climbed to JPY105.3550 overnight, up 0.08 percent. The pair broke to JPY105.4150, the highest level since October 2008.

The dollar has continued to gain since the US Federal Reserve’s announcement on 17 October that it intended to scale back its monthly asset purchase programme by USD10bn a month to USD75bn a month.

While the Fed is expected to continue to taper its easing programme, Japan is expected to continue or extend its aggressive bong purchase programme in an effort to fight deflationary pressures. Bank of Japan officials have pledged to expand the monetary base by an annual 60 trillion to JPY70 trillion as they push towards their target of 2 percent inflation. Though they have denied targeting the currency, recent yen weakness will help import some of the BoJ’s much desired inflation.
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