USD Falls Against Yen Amid BOJ Rate-Hike Expectations

The US dollar fell against most major currencies on Thursday, led by a sharp decline against the Japanese yen. The USDJPY pair dropped 1.22% to 154.33, reaching its lowest level in about six months.

The decline is attributed to changing expectations for Bank of Japan policy. Takuji Aida, an economic adviser to Prime Minister Sanae Takaichi, expects the BOJ to raise rates at its September meeting, which would narrow the interest-rate differential between the US and Japan.

This reduction in the differential makes it less attractive to borrow yen to purchase higher-yielding assets, also known as the 'yen carry trade'. The USD was lower against all major currencies except for the New Zealand dollar, where it gained 0.09%.