The Japanese yen surged against the US dollar on Wednesday, sparking speculation that Japanese officials intervened to support the currency. The yen has seen several sharp rallies in recent days, recovering from a 38-year low of 161.96 per dollar. Market participants believe that the Bank of Japan (BoJ) may have spent around 6 trillion yen in intervention last week to weaken the dollar. While official confirmation from the Japanese Ministry of Finance is awaited, traders cite comments from Republican Presidential nominee Donald Trump on the recent strength of the dollar as a possible cause for dollar weakness.
The dollar index, which measures the greenback against a basket of currencies, also weakened, influenced by comments from several Federal Reserve officials suggesting a potential interest rate cut.
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Meanwhile, the British pound hit a one-year high against the dollar, driven by data showing that UK inflation rose slightly more than expected, dampening chances for a rate cut from the Bank of England. The strength of the pound reflects a resilient UK economy and reduced expectations for a rate cut.