Dollar Plunges to Worst Day Since April Amid Yen Spike and Fed Skepticism

The Japanese yen surged against the US dollar on Thursday, sparking speculation that authorities in Tokyo may have intervened in foreign exchange markets. The move comes after the yen spent over a month languishing in intervention territory, and authorities such as Finance Minister Satsuki Katayama have been vocal about being ready to take 'decisive action' to respond to speculative moves in the currency.

The dollar's slump was also driven partly by traders' skepticism about Federal Reserve Chair Kevin Warsh's assertions on Wednesday about fighting inflation. Warsh said that the FOMC had a 'good family fight' and an 'active, robust' discussion centered on four areas: persistent inflation, recent economic shocks, price pressures arising from those shocks, and monetary policy tools.

The sterling gained after the Bank of England stood pat on rates as widely expected. The pound rose 1% to $1.3474, while the euro climbed 0.6% to $1.1533. Government data in the morning showed gross domestic product (GDP) grew 0.4% in the eurozone in Q2 2026 from Q1.