The US dollar hit its highest level against the yen in more than three weeks on Friday on expectations of a potential summer Federal Reserve interest rate hike, while the dollar was little changed against the euro after profit-taking. The dollar hit 110.58 yen, its highest level against the Japanese currency since April 28. Analysts said minutes from the Fed's April meeting released Wednesday indicating a June rate hike was firmly on the table were still supporting the dollar.
Analysts also said it was unlikely that Group of 7 countries would reject potential Japanese plans to weaken the yen at a G7 meeting of finance leaders this weekend in Sendai, Japan. "The majority of the move is the aftermath of the FOMC minutes," said Alfonso Esparza, senior currency strategist at Oanda in Toronto. "The gap between what the Fed says and what the Fed does seems to be shrinking," he said on traders' increased expectations that the US central bank could increase interest rates this summer.
Expectations for a hawkish Fed failed to buoy the dollar against the euro. Analysts said traders took profits from the dollar's rally against the euro after the euro fell to a more than seven-week low against the greenback of $1.1178 on Thursday.