Dollar Weakens Against Yen Ahead of Inflation Report

The US dollar weakened against the yen on Thursday ahead of a key inflation report that could influence interest rates. The yen rose to a one-week high of 162.88 against the dollar, but traders said this was not due to any Japanese intervention.

The dollar had initially strengthened after the US announced air strikes in Iran, making it a safe-haven asset. However, investors soon shifted their focus to the Personal Consumption Expenditures Index, which is expected to show price pressures rose by 3.7% annually in June, down from 4.1% in May.

The Federal Reserve's recent press conference did not suggest it will rush to hike interest rates, and analysts at UBS noted that the market interpreted this as dovish. As a result, traders are increasing their expectations for the Fed to keep rates unchanged again in September.