Dollar Ascends as Fed Signals Pause, Yen Falters Post BOJ Decision

The dollar surged to a two-year peak following the Federal Reserve's indication of a slower rate cut pace in 2025. Meanwhile, the yen weakened after the Bank of Japan kept interest rates steady, offering limited insights into its monetary policy. Global markets reacted sharply to these developments.

The U.S. dollar reached a two-year high on Thursday as the Federal Reserve signaled a more cautious approach towards rate cuts in 2025. In stark contrast, the yen depreciated after the Bank of Japan maintained its interest rate, providing few indicators of future policy changes.

Following the BOJ's decision, the yen fell past 156 per dollar, hitting its weakest point in a month as Governor Kazuo Ueda reiterated the need for more data analysis and understanding of U.S. political impacts. Investors found themselves perplexed by the mixed signals from both the Fed and the BOJ.

Global markets reacted to the Fed's hawkish tone, particularly impacting currencies. The Swiss franc, Canadian dollar, and South Korean won hit new lows, while the U.S. dollar's strength persisted, supported by expectations of continued steady rates. These movements underscore the volatility in currency markets amid shifting monetary policies globally.

(With inputs from agencies.)