The yen was poised on Friday for its strongest weekly performance in over a month as expectations grow that the Bank of Japan will raise rates next week, putting the dollar on the back foot ahead of Donald Trump's return to the White House.

BOJ Gov. Kazuo Ueda reinforced his deputy’s message this week that his board will consider a rate hike at the meeting, boosting the yen and expectations for action.

The deputy governor said the bank will discuss whether to raise the policy rate or not at the meeting, based on the latest outlook on the economy and prices.

Japan's annual wholesale inflation held steady at 3.8% in December on stubbornly high food costs, data showed on Thursday, highlighting persistent price pressures that may prod the central bank to raise interest rates next week.

Under incumbent governor Kazuo Ueda, the BOJ ended Kuroda's stimulus measures in March and raised short-term interest rates to 0.25% in July. Ueda has signalled a readiness to raise rates further if Japan continues to progress towards durably reaching 2% inflation.

Bank of Japan officials see a good chance of an interest rate hike next week as long as the arrival of Donald Trump at the White House doesn’t trigger too many negative surprises, according to people familiar with the matter.