Dollar Climbs to Two‑Month High as Yen Slides to 160‑Range Amid BOJ Uncertainty

The U.S. dollar surged to a two‑month peak, while the Japanese yen slipped to a two‑week low near ¥160, reflecting renewed doubts over the Bank of Japan’s (BOJ) policy stance and heightened tensions with China. The yen fell 0.50% to ¥156.70 against the dollar, after briefly touching ¥156.82 – its lowest level since February 9.

The slide came after Prime Minister Sanae Takaichi announced reservations about further rate hikes, a comment that prompted China to add several Japanese firms to its export‑control list in retaliation. Takaichi’s landslide victory earlier in the year had initially buoyed the yen as markets expected a stimulus‑friendly government to tilt the risk balance toward tighter policy.

In a move that could tilt the BOJ further toward dovishness, Japan’s government nominated two academics known for their support of fiscal stimulus to the central bank’s board. However, MUFG research head Derek Halpenny cautioned that the change might not dramatically shift policy, noting that the departing members were already on the dovish side.

Market participants are also watching Nvidia (NVDA.O) closely, as the chipmaker’s earnings release after the bell could sway risk appetite. With Nvidia carrying an 8% weight in the S&P 500, its results could have a disproportionate effect on market sentiment.

The Australian dollar gained 0.35% to AUD 0.7084, driven by a spike in inflation that raises the likelihood of rate hikes. As a high‑beta currency, the Aussie remains closely tied to global risk assets and is particularly sensitive to equity market turbulence.

The euro edged up 0.05% to €1.1718, while the U.S. dollar index slipped 0.05% to 97.92. The yuan, which has risen nearly 7% over the past ten months, reached its highest level in almost three years at 6.8766 per dollar in on‑shore trading and 6.8652 in offshore markets.

Analysts at Goldman Sachs highlighted that the currency’s deep undervaluation and the export sector’s robust performance continue to underpin its strength.

Overall, the dollar’s rally underscores a shift toward risk‑off sentiment, with the yen’s decline and the BOJ’s policy uncertainty at the core of the move.