The Japanese yen advanced against its major counterparts in the Asian session on Friday, as most Asian shares fell amid concerns over tighter monetary policy to contain inflationary pressures, as well as economic risks from the Omicron variant.

The Bank of England lifted its key interest rate unexpectedly, while the European Central Bank announced an end to net purchases under the pandemic emergency purchasing programme in March.

The Fed doubled the pace of tapering of bond purchases and signaled three interest rate hikes in 2022.

Investors seem worried about central banks adopting a more hawkish turn to tackle high inflation.

The U.K. reported a record number of daily coronavirus cases for the second day in a row on Thursday.

Coronavirus infections and hospitalizations are climbing in the U.S., with a growing number of states reporting Omicron cases.

The Bank of Japan decided to scale back its pandemic related funding measures as the economy is set to recover amid waning supply-side constraints.

The board, governed by Haruhiko Kuroda, decided to end the additional purchases of CP and corporate bonds at the end of March 2022 as scheduled.

From April 2022, the purchases of securities will be of the same amount as prior to the COVID-19 pandemic, so that the amounts outstanding of these assets will decrease gradually to the pre-pandemic levels, namely, about JPY 2 trillion for CP and about JPY 3 trillion for corporate bonds.

The board decided to maintain the interest rate at -0.1 percent on current accounts that financial institutions maintain at the central bank.

The bank will also continue to purchase a necessary amount of Japanese government bonds without setting an upper limit so that 10-year JGB yields will remain at around zero percent.

The yen edged higher to 151.11 against the pound, 128.53 against the euro and 123.45 against the franc, recovering from its early lows of 151.72, 128.99 and 123.81, respectively. The next possible resistance for the yen is seen around 149.00 against the pound, 126.00 against the euro and 120.5 against the franc.

The yen touched a 3-day high of 113.44 against the greenback, from a low of 113.86 seen at 7:45 pm ET. The yen is likely to challenge resistance around the 109 level.

The yen bounced off from its prior lows of 89.09 against the loonie, 81.75 against the aussie and 77.38 against the kiwi and was trading at 2-day highs of 88.57, 81.15 and 76.86, respectively. The yen is seen finding resistance around 86.00 against the loonie, 79.00 against the aussie and 75.00 against the kiwi.

Looking ahead, German PPI and U.K. retail sales for November are due at 2.00 am ET.

German Ifo business sentiment index for December and Eurozone CPI for November will be featured in the European session.

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