The dollar and euro hit five-year highs against the yen in Asia Friday as investors bet that the US Federal Reserve will announce a start to its long-awaited stimulus wind-down next week.
The greenback bought 103.85 yen in Tokyo afternoon trade from 103.36 yen in New York on Thursday, while the euro fetched 142.73 yen compared with 142.15 yen -- both at highs not seen since October 2008.
The single currency was also at $1.3759, from $1.3752.
The release on Washington on Thursday of data showing retail sales rose 0.7 percent in November -- better than the 0.6 percent forecast -- added to already vibrant speculation that the Fed will begin to cut its bond-buying this month.
While some analysts say the Fed may hold off until January, the upbeat sales figures added to the picture of a stronger US economy that does not need as much central bank support as it did at the start of the year.
"The conclusion must be that it is increasingly likely the much debated Fed taper begins next week," National Australia Bank said. A reduction in the Fed's $85 billion a month programme will mean fewer dollars in circulation, which will in turn increase demand.
The Fed holds its final policy meeting of the year on Tuesday and Wednesday.
The yen has also been pressured by a growing sense that the Bank of Japan will add to its own monetary easing scheme after a marked slowdown in the country's third-quarter economic growth.
Dealers said a closely watched BoJ business confidence survey due out Monday will give a better idea of the bank's plans for its stimulus, which it put into effect in April.
"Investors will be looking for a cue to sell the yen stemming from the BoJ's additional easing," Citigroup Global Market Japan chief forex strategist Osamu Takashima told Dow Jones Newswires.
The yen has lost about a quarter of its value against the dollar since late last year when, as leader of the opposition, now-Prime Minister Shinzo Abe promised a policy blitz to stoke the economy.
The euro has enjoyed strong support since the ECB this month held off any new interest rate cuts despite prolonged low inflation. That followed a surprise cut in November of its central refinancing rate by a quarter-point to counter the threat of deflation.
However, Credit Agricole said the euro-dollar rate could be set for a tumble, with the ECB likely to usher in more policy measures next year to prop up the eurozone economy.
"There is only very limited upside left to the euro-dollar," it added. "Given the risk for the ECB to turn more dovish again and as the Fed is getting closer to a reduction of (stimulus) we see room for renewed euro-dollar downside."
The Australian dollar fell to a near four-month low of 89.36 US cents from 91.35 cents after after the head of the country's central bank said he wanted to see it at 85 to help stimulate trade-exposed sectors of the economy.
The dollar was mixed against other Asia-Pacific currencies.
It rose to 32.08 Thai baht from 32.02 baht on Thursday, to 12,030 Indonesian rupiah from 11,985 rupiah, to 1,052.95 South Korean won from 1,052.60 won and to Sg$1.2564 from Sg$1.2494.
It also rose to Tw$29.62 from Tw$29.55, and to 62.13 Indian rupees from 61.36 rupees, while slipping to 44.21 Philippine pesos from 44.27 pesos.
The Chinese yuan firmed to 17.06 from 16.92 yen.