The yen plunged nearly 1% to an eight-month low after the Bank of Japan kept interest rates at 0.5%, a decision that investors saw as a cautious sign of policy normalization. The BOJ kept just two policymakers in favor of a rate hike, indicating a slow pace of easing.
Governor Kazuo Ueda gave no clear signal on the timing of the next rate hike, keeping the yen under pressure, while the US dollar rose to 154.18 yen. The euro and sterling also strengthened to new highs against the yen.
Meanwhile, markets were assessing a trade deal between US President Donald Trump and Chinese President Xi Jinping, in which the US agreed to reduce tariffs in exchange for repurchasing Chinese soybean and rare earth exports. However, details remain sketchy.
The US dollar also found support after hawkish comments from Fed Chairman Jerome Powell, who stressed that a lack of data due to the government shutdown could delay additional rate cuts this year. The Fed recently cut rates by 25 basis points and will end balance sheet reduction in December.
Investors remain cautious about the real-time stability of US-China trade relations.
