Dollar Hits Three-Week Low Amid Interest Rate Speculations

The dollar fell to a three-week low against the yen but halted its decline against other currencies. Investor expectations of Federal Reserve rate cuts affected the currency's performance. Remarks from Fed Chair Jerome Powell and global economic events, like Middle East tensions, also influenced market movements.

The dollar hit a three-week low against the yen on Monday but managed to stabilize against other major currencies. This comes as investors are anticipating an imminent series of interest rate cuts by the Federal Reserve.

The greenback declined by 0.7% to 143.45 yen, a level not seen since August 5, and was recently trading at a 0.2% drop. In contrast, the dollar showed slight firmness against the euro and sterling, which had earlier hit multi-month lows. Fed Chair Jerome Powell's comments at the Jackson Hole economic conference confirmed market speculations of an upcoming rate cut, possibly as soon as September.

Meanwhile, the Bank of Japan and the Bank of England also signaled their stances on inflation and interest rates. The yen strengthened as BOJ chief Kazuo Ueda hinted at possible rate hikes if inflation targets were met. Similarly, the pound eased slightly amid BOE head Andrew Bailey's cautious remarks on inflation. The dollar index saw a minor uptick, supported by lower trading activity due to a UK public holiday.

(With inputs from agencies.)