By Hiroyuki Kachi

Analysts on the lookout for uneasy U.S., Japan officials

The dollar hit its highest level in more than 12 years against the yen in Asia Thursday, with the U.S. currency's rapid pace of gains putting market participants on alert for any signs of discomfort from U.S. and Japanese government officials.

Building upon its overnight momentum, the greenback (USDJPY) rose at one point midday in Tokyo to Yen124.30, its highest since Dec. 5, 2002 before backing off to Yen123.69. That is higher than YenY123.67 late Wednesday in New York.

"I think that the pace of gains are a bit rapid," said Shinji Kureda, head of the FX trading group at Sumitomo Mitsui Banking Corp. He added that the dollar's gains come despite a lack of fresh trading cues, suggesting investors are filled with certainty about a rebound in upcoming U.S. economic data.

"I can't think of any other reason than buying by people who feel confident about a rebound" in the data, including U.S. employment figures due out on June 5, said Kureda.

Investors are going to be intently watching to see how currency authorities react to the rally. They will be paying particularly close attention to any kind of in-depth remarks coming from top officials at the coming Group of Seven finance ministers meeting in Germany.

Japan's top government spokesman stopped short of saying that the latest fall in the yen wasn't rapid. Chief Cabinet Secretary Yoshihide Suga said at his regular news conference that the government will continue to watch the foreign exchange market closely, adding that there was a G-7 consensus that rapid moves in exchange rates were "undesirable."

Asked whether he still regarded the dollar's movements against the yen as being "not rapid" -- the description he had been using since Monday -- Suga reiterated the G-7 position without stating his own view.

"The dollar was bought against the yen as the currency market interpreted his remarks as not sending a strong message to keep the dollar's rise in check," said Yuji Saito, executive director of foreign exchange at Crédit Agricole Corporate & Investment Bank.

Many market participants are betting that dollar will broadly appreciate even further on the back of diverging monetary policy in the U.S. and Japan.

A soft patch in the U.S. economy since the beginning of this year has made it unclear when the Federal Reserve would raise short-term interest rates.

But a string of encouraging signs for the U.S. economy along with remarks by Fed Chairwoman Janet Yellen reminded investors of the high likelihood that the Fed would raise rates long before rival central banks. In fact, Yellen said Friday the central bank is on track to raise interest rates sometime this year.

Among other currency pairs, the euro (EURUSD) was at $1.0906 from $1.0904, while the common currency (EURJPY) was at Yen135.16 from Yen134.86.

On Wednesday, Greek Prime Minister Alexis Tsipras said the country is close to an agreement with its international creditors over its rescue program.

The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was up 0.14% at 87.37.

Interbank Foreign Exchange Rates At 00:50 EST / 0450 GMT Latest Previous %Chg Daily Daily %Chg Dollar Rates Close High Low 12/31 USD/JPY Japan 124.12-13 123.66-67 +0.37 124.29 123.50 +3.67 EUR/USD Euro 1.0908-11 1.0903-06 +0.05 1.0922 1.0891 -9.83 GBP/USD U.K. 1.5353-55 1.5354-56 -0.01 1.5367 1.5339 -1.44 USD/CHF Switzerland 0.9480-84 0.9493-97 -0.14 0.9505 0.9477 -4.64 USD/CAD Canada 1.2470-75 1.2450-55 +0.16 1.2477 1.2443 +7.32 AUD/USD Australia 0.7679-83 0.7726-30 -0.61 0.7761 0.7672 -6.00 NZD/USD New Zealand 0.7236-42 0.7260-66 -0.33 0.7272 0.7229 -7.13 Euro Rate EUR/JPY Japan 135.39-43 134.83-87 +0.42 135.50 134.74 -6.58 Source: ICAP PLC

Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com