The dollar was 0.65% lower against the Japanese yen at 155.98, not far from Thursday’s five-week low of 155.375
The yen gained on Tuesday as investors reacted to comments from a senior Japanese politician that added to the pressure on the BoJ to keep raising rates to boost the currency.
The dollar and euro held broadly steady as traders took a breather in a week with little economic data, while the Australian and New Zealand dollars tumbled after China’s surprise interest rate cut.
The dollar was 0.65% lower against the Japanese yen at 155.98, not far from Thursday’s five-week low of 155.375.
Senior ruling party official Toshimitsu Motegi said overnight that the BoJ should more clearly indicate its resolve to normalise monetary policy, including through steady interest rate hikes. The Bank of Japan next sets rates on July 31.
The yen derived support from further comments from Japanese politicians overnight, according to Lee Hardman, currency analyst at Japanese bank MUFG, who added that his comments indicated “growing unease” among politicians about BoJ policy.
It closely follows calls last week from Digital Transformation Minister Kono Taro who called on the BoJ to hike interest rates to provide more support for the yen.
The yen has found some support on the back of Tokyo’s recent interventions to bolster the currency and as traders looked to the BoJ’s decision.
The dollar index, which tracks the U.S. currency against other major currencies, was little changed at 104.33, after dropping to a four-month low of 103.64 last week.
The euro was 0.15% lower at $1.0874. Sterling was down 0.12% at $1.2915.
The Australian and New Zealand dollars struggled to regain their footing on Tuesday after China’s move to cut several key interest rates.
The Australian dollar dropped to a three-week low of $0.6622, while the New Zealand dollar reached its lowest level since early May at $0.5962.
