On Friday, the US dollar is extending its bullish mood and looks all set to end the fifth straight week in the green against safe haven Japanese yen, even as investors turn their focus towards the all-important non-farm payrolls data for December due later today. At the time of writing, the US dollar index DXY is trading around 96.21.

Earlier this week, USD/JPY touched the highest levels seen in five years amid rising expectations for the Fed to hike interest rates soon. Although it has since eased lower and given back some of its gains, it is still up by 0.7% for the week.

With investors looking forward to a rate hike by the Fed in the near future, bond yields have been soaring and supporting the US dollar, sending it higher against the Japanese yen and most of the other leading currencies of the world. With the Bank of Japan expected to maintain its dovish stance for far longer than its peers, the JPY has taken the hardest hit due to the sentiment surrounding an impending rate hike by the Fed.

The greenback is also set to register strong gains against popular commodity currencies AUD and NZD this week. AUD/USD has been affected severely as Australia sees a steady increase in COVID-19 infections and hospitalizations, although authorities have ruled out the possibility of bringing back more curbs and restrictions.

Meanwhile, EUR/USD is also down by around 0.7% so far this week and could see even more weakness if the NFP data comes in stronger than forecast. Economists have forecast an increase by 400k jobs through December but there is optimism in the market for a higher reading, especially after the strong ADP private payrolls figures which were released earlier this week.