Dollar Steady as Yen Rises Amid BOJ Hawkish Expectations

The US dollar held steady on Friday after Federal Reserve Governor Christopher Waller dampened expectations for a September rate hike, but the Japanese yen rose to a one-month high and was poised for its strongest weekly gain since late July.

The euro and pound were firmer against the dollar, while investors awaited the release of US payrolls data, which could provide fresh clues on the Fed's next move. The EUR/USD pair remained little changed at $1.16, but the GBP/USD pair gained 0.1% to $1.35.

The yen's rally was linked to expectations that the Bank of Japan (BOJ) could take a more hawkish approach at its September meeting and potentially raise rates by 25 basis points this month. State Street strategist Masahiko Loo said the market was reassessing a more hawkish BOJ path, while Japan's top currency diplomat Atsushi Mimura remained alert to exchange-rate moves.