The dollar plunged 0.66% to 143.45 yen for the first time since August 5 before trading down 0.31%
The dollar dipped to a three-week low against the yen on Monday as Fed Chair Jerome Powell’s emphatic dovish shift contrasted sharply with Bank of Japan chief Kazuo Ueda’s steadfastly hawkish tone.
The U.S. currency remained near its lowest in 13 months against the euro, and sagged closer to levels last seen in March 2022 versus sterling, with BoE head Andrew Bailey’s comments that it was “too early to declare victory” over inflation hinting a less aggressive stance on interest rate cuts than the Fed.
The dollar plunged 0.66% to 143.45 yen for the first time since August 5 before trading down 0.31% as of 0517 GMT.
Sterling declined slightly to $1.31995 after climbing as high as $1.32295 on Friday for the first time in 17 months.
Although Fed officials had sounded increasingly dovish in the lead up to the Fed’s annual Jackson Hole symposium, Powell on Friday “used stronger language” than his peers when delivering his keynote speech, said Tapas Strickland, head of market economics at National Australia Bank.
Earlier Friday, in parliamentary testimony in Tokyo, Ueda stuck to the script of the BoJ needing to adjust the degree of easing – central bank-speak for a further rise in the policy rate from a low level – and he played down the significance of the July rate hike on market turmoil, Strickland added.
Many market participants anticipated Ueda might strike a less hawkish tone in the special session of parliament, which was called amid criticism the surprise hike last month helped trigger a rapid unwind of bearish yen bets and aggressive sell-off of Japanese stocks.
The dollar index stayed at 100.69, just above the 13-month low of 100.60 hit at the end of last week.
The Chinese yuan dropped marginally to 7.1202 per dollar in offshore trading, after beginning the day by adding 0.13% to 7.1069, the highest level since August 5.
