The U.S. dollar fell against the yen and major currencies on Thursday after the Federal Reserve opened the door to cutting interest rates in September, helping to keep the yen near its highest levels since March following a shift to positive interest rates from the Bank of Japan.
Yesterday, the Bank of Japan began the central bank decisions by raising interest rates to levels not seen in Japan for 15 years, followed by the Federal Reserve’s decision to hold interest rates steady, but it put interest rate cuts on the table next month, with inflation declining in the United States.
The yen was volatile in early trading, rising about 1% to 148.51 per dollar, its highest since mid-March, before settling slightly higher at 149.46 yen per dollar.
The Bank of Japan also announced plans to halve its monthly purchases of Japanese government bonds from January to March 2026, with Governor Kazuo Ueda not ruling out another increase this year.
The yen rose 7% in July, its strongest monthly performance since November 2022, after starting the month near a 38-year low, largely due to $36.8 billion in intervention by Japanese authorities.
However, the currency fell 5.7% against the dollar during the year due to the wide interest rate differential between Japan and the United States.
The dollar index, which measures the greenback against six major currencies, fell 0.1% to 103.95, after falling 0.38% on Wednesday.
The index fell 1.7% in July, its weakest monthly performance of the year.
The euro was last at $1.0834, after rising 1% in July, while sterling was at $1.2852 ahead of a monetary policy decision by the Bank of England, where the central bank could cut interest rates but markets and economists remain uncertain whether it will do so.
