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The U.S. dollar rose in early European trade Friday, posting strong gains against the Japanese yen after the Bank of Japan maintained its ultra-easy monetary policy in contrast to the aggressive tightening of its peers.

At 3 AM ET (0700 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.8% higher at 104.245, after slipping to a one-week low of 103.41 overnight, a contrast to the two-decade high of 105.79 prior to the Fed decision.

USD/JPY rose 1.6% to 134.37 after a bout of volatile trading in the immediate aftermath of the BoJ’s decision to keep its short-term interest rate target at -0.1% with a pledge to guide the 10-year government bond yield around 0%.

This very loose monetary policy places the BoJ in a room on its own after the U.S. Federal Reserve, the Swiss National Bank, and the Bank of England all hiked interest rates this week.

Japanese officials tried to provide some support for their beleaguered currency earlier Friday, with the government and central bank issuing a rare joint statement stating they were concerned by recent sharp falls in the yen, the strongest warning to date that Tokyo could intervene to support the currency as it plumbs 20-year lows.

“The yen remains vulnerable, especially if some stabilisation in risk sentiment lifts safe-haven support to the currency and leaves it exposed to the evidence of sharply rising yields and hawkish Fed tightening,” said analysts at ING, in a note. 

“We continue to flag the elevated risk of USD/JPY breaking significantly above 135.00 in the coming days unless Japanese authorities step in with FX intervention.”

Attention will shift to the release of U.S. industrial and manufacturing production later in the session for guidance, with the industrial production number expected to tick up 0.4% for the month of May compared to a 1.1% gain for April. Manufacturing production is expected to rise 0.3% for May, compared with an 0.8% gain the prior month.

Elsewhere, EUR/USD fell 0.4% to 1.0504, retreating from a one-week high in the wake of the European Central Bank’s decision to promise fresh support to contain borrowing costs among southern nations.

GBP/USD fell 0.7% to 1.2264, handing back a fair portion of the gains seen Thursday after the Bank of England hiked for its fifth consecutive meeting and pointed to further hawkish action ahead.

USD/CHF rose 0.2% to 0.9686, with the dollar gaining some ground against the Swiss franc after tumbling the most in seven years overnight as the Swiss National Bank surprised with a half-point hike.

Elsewhere, the risk sensitive AUD/USD fell 0.9% to 0.6978, NZD/USD fell 0.7% to 0.6319, while USD/CNY was largely unchanged at 6.7006.

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