By Chibuike Oguh and Linda Pasquini

NEW YORK/LONDON (Reuters) -The dollar strengthened against the yen on Friday, hitting its highest level in two weeks, after the Bank of Japan left interest rates unchanged and indicated that it was not in a hurry to hike them again.

The BOJ could afford to spend time eyeing the fallout from global economic uncertainties, Governor Kazuo Ueda said in a press conference following the central bank’s move, adding that its monetary policy decision will be based on “economic, price and financial developments.” The BOJ kept rates steady at 0.25%, a move that was widely expected.

The dollar rose as high as 144.50 yen, reaching its highest level since early September. It was last up 0.92% at 143.92. The euro also strengthened against the yen, gaining 0.93% to 160.59.

“We’re seeing a little bit of consolidation in markets that got the dollar-yen move, which has been quite significant in the past few days since the Fed,” said Shaun Osborne, chief FX strategist at Scotiabank in Toronto, referring to the Federal Reserve’s decision on Wednesday to cut interest rates by half a percentage point.

“The statement sounded perhaps a little bit more cautious than markets would have liked given the assumption that we will see another rate cut from the Bank of Japan before Christmas. I still think that’s likely.”

The dollar has traded in a choppy fashion since the Fed kicked off its monetary policy easing cycle.

Against the dollar, however, the euro weakened 0.01% to $1.115925. The , which measures the greenback against major currencies, gained slightly to 100.75 and just above a one-year low.

“There’s a sense in the market that the Bank of Japan doesn’t need to hike rates and also we’re turning more to the political situation in Japan,” said Adam Button, chief currency analyst at ForexLive in Toronto.

Markets imply nearly a 49% chance the Fed will deliver another 50-basis-point rate cut in November and have priced in 74.8 bps of cuts by the end of this year. The Fed’s policy rate is expected by the end of 2025 to be at 2.85%, which is now thought to be the Fed’s estimate of the neutral rate.

That dovish outlook has bolstered hopes for continued U.S. economic growth and sparked a major rally in risk assets. Currencies leveraged to global growth and commodity prices also benefited, with the Australian dollar reaching as high as $0.68285. It was last down 0.13% to $0.68060.

“It runs counter-intuitive to what we’ve seen in the market, with a big cut from the Fed and the Bank of Japan holding rates. I think that the message really from dollar-yen is that the market is feeling better about global growth,” Button said.

China unexpectedly left benchmark lending rates unchanged at the monthly fixing on Friday. Beijing has been hinting at other stimulus measures, enabled in part by the Fed’s aggressive easing that shoved the dollar to a 16-month low against the yuan.

Major Chinese state-owned banks were seen buying dollars in the onshore spot foreign exchange market on Friday to prevent the yuan from appreciating too fast, two people with knowledge of the matter said. The dollar weakened 0.23% to 7.043 versus the offshore .

The Bank of England kept rates unchanged on Thursday, with its governor saying the central bank had to be “careful not to cut too fast or by too much.”

The pound was up 0.24% at $1.33180, supported by the release on Friday of strong British retail sales data.

Currency bid prices at 20              

September​ 06:46 p.m. GMT

Description RIC Last U.S. Close Previous Session Pct Change YTD Pct High Bid Low Bid

Dollar index 100.74 100.67 0.07% -0.62% 101.01 100.41

Euro/Dollar 1.1162 1.1162 -0.01% 1.11% $1.1181 $1.1136

Dollar/Yen 143.84 142.62 0.9% 2.03% 144.485 141.84

Euro/Yen 1.1162​ 159.19 0.85% 3.16% 161.15 158.43

Dollar/Swiss 0.8506 0.8478 0.35% 1.09% 0.8516 0.8453

Sterling/Dollar 1.3314 1.3286 0.22% 4.63% $1.3341 $1.3269​

Dollar/Canadian 1.356 1.3557 0.04% 2.31% 1.359 1.3543

Aussie/Dollar 0.6806 0.6815 -0.13% -0.18% $0.6829 $0.6784

Euro/Swiss 0.9494 0.9462 0.34% 2.22% 0.9503 0.9447

Euro/Sterling 0.838 0.8401 -0.25% -3.32% 0.8407 0.8382

NZ Dollar/Dollar 0.6237 0.6242 -0.06% -1.29% $0.6258 0.621

Dollar/Norway 10.4989​ 10.4814 0.17% 3.59% 10.561 10.4482

Euro/Norway 11.7197 11.699 0.18% 4.42% 11.7702 11.681

Dollar/Sweden 10.1778 10.1512 0.26% 1.1% 10.2309 10.138

Euro/Sweden 11.3604 11.338 0.2% 2.11% 11.3988 11.3326

Investing.com – The U.S. dollar edged higher Friday, but remained under pressure after the Federal Reserve’s large interest rate cut, while sterling rose strongly after healthy UK retail sales data. 

At 04:00 ET (09:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% higher to 100.480, but remained just above a 12-month low.

Dollar struggling for buyers 

The U.S. dollar is struggling for friends in the wake of the Federal Reserve starting a rate-cutting cycle with a hefty 50 basis points reduction to a range of 4.75% to 5%.

Markets imply a 40% chance the Fed will cut by another 50 basis points in November and have 73 bps priced in by year-end. Rates are seen at 2.85% by the end of 2025, which is now thought to be the Fed’s estimate of neutral.

“But the big question for the market right now is whether the dollar is ready to break out of its two-year range,” said analysts at ING, in a note. “There seems nothing on the agenda today to justify a breakout, but suffice to say we are in the camp looking for some strong follow-through selling should DXY support levels at 99.50/100 give way.” 

Sterling surges this week

In Europe, rose 0.2% to 1.3312, with the pound up over 1% this week having hit its highest since March 2022.

Data released earlier Friday showed that British rose by a stronger-than-expected 1% in August and growth in July was revised up to 0.7%, from a previous estimate of a 0.5% month-on-month increase.

The held its key interest rate at 5% on Thursday, after kicking off its easing with a 25-bp reduction in August.

traded 0.1% higher to 1.1163, up almost 1% for the week and within striking distance of the August peak of 1.1201. 

The cut rates for the second time this year last week, but a degree of uncertainty exists over when the next move will be.

fell less than expected in August, decreasing by 0.8% on the year, below the expected 1.0% decline.

Yen slips after BOJ meeting

rose 0.7% to 143.62 after the held interest rates steady, and said it expected inflation and economic growth to steadily increase.

The BOJ decision and forecast came just hours after consumer price index data showed inflation rose to a 10-month high in August, as increased wages pushed up private consumption. 

While the yen was nursing weekly losses, it still remained close to its strongest levels for 2024, hit earlier in the week.

traded 0.2% lower to 7.0538, after the People’s Bank of China kept its benchmark unchanged, defying some expectations that it would cut rates further to stimulate the economy. 

The PBOC’s decision came even as a raft of recent economic indicators showed sustained weakness in China.

Investing.com– Most Asian currencies firmed on Friday, while the dollar nursed losses after the Federal Reserve cut rates by a wide margin and kicked off an easing cycle. 

The Japanese yen was among the better performers, strengthening after the Bank of Japan held interest rates and said it expected steady increases in inflation and economic growth.

The Chinese yuan also firmed after the People’s Bank of China kept its benchmark rates unchanged, ducking some expectations that it would cut rates to further support the economy. 

Yen firm as BOJ holds rates, flags higher inflation 

The Japanese yen firmed on Friday, with the pair falling 0.2% to 142.28 yen.

The BOJ in a unanimous decision, and said it expected inflation and economic growth to steadily increase.

While the central bank did not provide any overtly hawkish cues, its forecast of higher inflation tied into expectations that the BOJ will raise interest rates further. A slew of policymakers had signaled that rates will rise further in the coming months, especially as inflation picks up. 

The BOJ decision and forecast came just hours after data showed inflation rose to a 10-month high in August, as increased wages pushed up private consumption. 

While the yen was nursing weekly losses, it still remained close to its strongest levels for 2024, hit earlier in the week. Expectations of higher interest rates are likely to underpin the yen in the coming months. 

Dollar weak after rate cut cheer offsets less dovish Fed signals

The and both fell slightly in Asian trade, extending overnight declines as markets looked to lower U.S. interest rates.

The Fed and announced the start of an easing cycle, which could see rates fall by as much as 125 bps by the year-end. 

But Fed Chair Powell offered a less dovish outlook for medium-to-long term rates, stating that the central bank’s neutral rate will be much higher than seen in the past. His comments limited overall losses in the dollar, and had also seen the greenback appreciate in the immediate aftermath of the Fed decision on Wednesday.

Chinese yuan at 16-mth high as PBOC holds rates 

The Chinese yuan firmed on Friday, with the pair falling 0.3% to its lowest level since May 2023. 

Strength in the yuan came as the PBOC kept its benchmark steady, ducking some expectations that it would cut rates further to stimulate the economy. 

The PBOC’s decision came even as a raft of recent economic indicators showed sustained weakness in China.

But media reports said the PBOC was instructing local banks to buy dollars and limit overall strength in the yuan, given that a stronger yuan also weighs on Chinese exports. 

Broader Asian currencies firmed after the Fed’s decision. The Australian dollar’s pair rose 0.2% and was close to an eight-month high.

The South Korean won’s pair was an outlier, rising 0.2%, while the Singapore dollar’s pair fell 0.1%.

The Indian rupee’s pair fell 0.1%, pulling back further from record highs hit earlier this year.