Dollar Heads for July Loss Despite Friday Rebound; Yen Swings After Reported Intervention

The U.S. dollar recovered modestly on Friday, with the Dollar Index rising 0.25%, but remained on track for a monthly decline after the Federal Reserve left interest rates unchanged earlier this week.

The dollar came under pressure following softer-than-expected U.S. core PCE inflation data and continued uncertainty over the Fed's policy outlook. While three Fed officials reportedly favored a rate hike, Chair Kevin Warsh did not provide clear guidance on the timing of future policy moves.

The Japanese yen experienced sharp swings over the past 24 hours. USD/JPY fell to around 158 following reports of Japanese currency intervention before rebounding above 160 after the Bank of Japan kept interest rates unchanged. The BOJ said underlying inflation could reach its 2% target around early 2027. Capital Economics said the guidance could support another rate increase as early as October.

Elsewhere, the South Korean won weakened after reports of official intervention, while the Chinese yuan strengthened slightly following weaker-than-expected PMI data. The euro and pound edged lower in early trading, while the Australian dollar was little changed.

Investors will continue monitoring upcoming economic data and comments from major central banks for further policy signals.

Source: Reuters.