Yen Stumbles as BOJ Hints at Possible Rate Hike, Dollar Gains After Fed's Steady Stance

The Japanese yen fell against the U.S. dollar as the Bank of Japan signaled a potential rate hike soon, leaving traders underwhelmed. Meanwhile, Federal Reserve Chair Jerome Powell's comments on interest rates bolstered the dollar. The euro and British sterling also saw declines amid unchanged policy stances.

The Japanese yen plummeted against the U.S. dollar on Thursday after the Bank of Japan indicated a potential rate hike in the future, failing to meet traders' expectations for immediate action. This comes as the Federal Reserve under Jerome Powell maintained rates, boosting the dollar's strength.

Bank of Japan Governor Kazuo Ueda mentioned the possibility of a rate hike depending on future wage outlook, but his caution left yen bulls dissatisfied. At a press conference, he offered limited insight on timing, adding pressure to the yen's decline.

In contrast, Jerome Powell, addressing a divided Federal Reserve, noted potential threats to the job market but remained cautious about further rate cuts this year. This policy divide contributed to the dollar's rise against the yen and other currencies. The euro and British sterling also saw declines amid policy stabilities in Europe.

(With inputs from agencies.)