SYDNEY The yen wallowed at five-year troughs against the dollar and euro on Friday, having fallen prey to a renewed appetite for risk which lifted Wall Street to record highs and weighed on the low yielding currency.
The dollar fetched 104.81 yen, having risen as far as 104.85, while the euro was at 143.47 yen after peaking around 143.57 -- highs not seen since October 2008.
The yen's decline came in thin year-end trade and was a continuation of a well entrenched trend after Japanese authorities this year launched a shock-and-awe stimulus strategy to snap the economy out of years of deflation.
Data this morning is likely to provide further evidence the Bank of Japan's ultra-loose monetary policy is working with consumer price inflation expected to hit a new five-year high in November.
"USD/JPY continues to move towards my long held year-end target of 105.00 and is clearly getting a helping hand by the fact that the U.S. 10-year treasury is at 2.99 percent and testing the September high of 3 percent," said Chris Weston, chief market strategist at IG in Melbourne.
"The ever increasing premium the U.S. 10-year treasury commands against other developed market bonds is clearly increasing the USD's appeal."
Yields on Japanese government 10-year bonds are at just 71 basis points.
Treasury yields could rise further in 2014 if the Federal Reserve continue to scale back its bond-buying program, having last week taken the first step towards winding down the massive stimulus plan.
Against the dollar, the euro was little changed at $1.3687, still within a tight range of $1.3654-$1.3717 seen all this week.
The greenback also advanced against dollar-bloc commodity currencies such as the Australian and Canadian dollars, but fell on sterling after strong British mortgage data reinforced expectations the Bank of England may raise interest rates sooner than expected.
Sterling popped up to a 1-1/2 week high of $1.6438 before steadying at $1.6408. The Australian dollar slipped back below $0.8900, while the Canadian dollar fell to C$1.0650 per U.S. dollar from C$1.0617.
(Editing by Wayne Cole)