Dollar set for first monthly gain of 2025; yen choppy after BOJ
At the conclusion of its two-day policy meeting, the BOJ kept short-term interest rates steady at 0.5% in a unanimous vote. It upgraded its inflation forecasts for all three years through fiscal 2027 and said risks to the price outlook were "roughly balanced." The yen initially rallied, as traders priced in a stronger chance of a rate rise later this year, before reversing course to trade roughly unchanged on the day.
In the broader market, the dollar traded around two-month highs after Federal Reserve Chair Jerome Powell on Wednesday indicated he was in no rush to lower rates and offered little insight on when they might fall again.
The greenback was also on track for its first monthly gain for the year, bolstered by a hawkish Fed and US economic resilience, with uncertainty over US President Donald Trump's chaotic tariffs easing after an array of trade deals.
The euro has been one of the biggest casualties of the dollar's ascent this month, as investors have rushed to unwind bets laid on earlier this year on the premise that the European market may offer better opportunities.
"There were signs that the rotation trade that we saw in the early part of the year of pulling assets out of the US was over... this (upward) direction in the dollar was necessary," Rabobank strategist Jane Foley said.
The euro was last up 0.4% at $1.1445, having hit a seven-week low on Wednesday. Still, it remained on track to lose nearly 3% this month.— Reuters
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