Yen Gains as BOJ Signals Potential Rate Hike

The dollar weakened against the yen as the Bank of Japan hinted at a possible December rate hike. Meanwhile, prospects of a Federal Reserve rate cut also pressured the dollar, highlighting a pivotal month for global financial markets. Investors are keenly watching upcoming policy decisions.

The dollar faced downward pressure against the Japanese yen on Monday. This followed Bank of Japan Governor Kazuo Ueda's strongest hint yet that an interest rate hike could be possible in December, bolstering the struggling yen.

Simultaneously, market expectations for a December interest rate reduction by the Federal Reserve also weighed on the dollar. Ueda announced that the BOJ is evaluating the 'pros and cons' of raising rates at their upcoming meeting. The U.S. dollar fell nearly 1% to 154.665 yen before recovering slightly.

Across broader markets, the dollar's performance was muted as investors anticipated a pivotal December, with possibilities of the Fed's final rate cut of the year. U.S. manufacturing data showed continued contraction, adding complexity to monetary policy expectations.

(With inputs from agencies.)