The dollar falls against the yen

26 Aug 2024 , 10:04 AM

The yen soared to a three-week high against the dollar on Monday, as Federal Reserve Chair Jerome Powell’s unequivocal dovish move contrasted markedly with Bank of Japan Governor Kazuo Ueda’s stubbornly bullish tone.

The US dollar lingered near its lowest level in 13 months against the euro. It also fell closer to levels last seen in March 2022 vs the pound, with Bank of England Governor Andrew Bailey’s comments that it was “too early to declare victory” over inflation indicating a less aggressive position on interest rate cuts than the Federal Reserve.

The dollar fell 0.59% to 143.56 yen for the first time since August 5 in the early hours of Monday.

The dollar index, which measures the currency against a basket of six major rivals, including the euro, sterling, and yen, remained at 100.64, barely off the 13-month low of 100.60 reached at the end of last week.

The euro was little changed at $1.1190, near its Friday high of $1.1201, last reached in July of last year. That’s despite sources telling Reuters that European Central Bank policymakers are planning another rate drop on September 12.

According to the CME Group’s FedWatch Tool, traders universally expect the Fed to begin its easing campaign on September 18, although they estimate 36.5% possibilities of a massive 50-basis point cut. This is up from 25% odds a week ago.

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