Dollar hits nine-month low versus yen as Fed debate reignites
dollar fell to its lowest level this year against the Japanese yen on Friday after media reports reignited the debate about an outsized Federal Reserve rate cut next week.
The U.S. currency fell more than 0.8% to 140.645 yen, the lowest since late December, and last traded 0.7% lower at 140.8. The euro, pound and Swiss franc made gains against the dollar.
U.S. economic data this week appeared to support the case for a typical 25 basis point (bp) cut next week, with the measure of consumer price inflation that strips out volatile food and energy prices rising more than expected in August.
However, market analysts said reports by the Wall Street Journal and Financial Times saying a 50 basis point cut is still an option, and comments from a former Fed official arguing for an outsized cut, caused a shift in market expectations.
«A couple of articles were published in the Wall Street Journal and the FT suggesting that a 50 bp move was still in play, which has led markets to once again re-evaluate their expectations,» said Henry Allen, macro strategist at Deutsche Bank.
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