Dollar Struggles as Yen Extends Rally Amid BoJ Hike Bets
The US dollar struggled to gain momentum ahead of the release of key inflation data for August. The greenback traded quietly, giving back some of its gains against the Swiss franc and New Zealand dollar.
The US Treasury's announcement of a smaller-than-expected $6 billion buyback operation did little to boost the dollar, despite rising yields that reflected disappointment among bond investors. Yields rose as there had been heightened speculation for at least a $10 billion buyback.
Hotter-than-expected inflation data today could heighten anxiety about a similar report tomorrow, potentially allowing investors to ramp up their rate hike bets and add fuel to the dollar's engines.
The Japanese yen extended its rally amid bets of a Bank of Japan interest rate hike in September. The BoJ's hawkish remarks, including those from Governor Ueda, further encouraged yen buying. Hawkish comments by economic adviser to PM Takaichi also raised expectations for more hikes after September.