Dollar holds steady before Jackson Hole, yen little changed after BOJ remarks

The dollar was largely flat on Thursday as traders looked to Fed guidance from Jackson Hole’s annual summit, with the yen largely undisturbed by Bank of Japan Deputy Gov. Ryozo Himino saying timely rate hikes were necessary.

The dollar fell in muted trade before a speech by Fed Chair Kevin Warsh on Friday, which will give an indication of the direction the US central bank might take on interest rates.

The dollar index was down 0.3 percent on the week after shedding 0.8 percent in the last. Himino said that the BOJ needed to respond to changing monetary conditions in a “timely and appropriate manner” as its underlying inflation targets near their 2 percent goal.

He did not give any indication as to how many rate hikes were in store. However, he also gave no hints as to when a hike can be expected, keeping investors without a clear indication about a move in September.

Himino had not expected to be asked when he expects rates to be hiked, according to a colleague, but he still gave an indication that may suggest an interest rate hike sooner rather than later.

The Japanese yen remained virtually unchanged on Thursday at just above 159 to the dollar after his comments, with the dollar still off 0.3 percent weekly and the greenback also struggling for traction with its Japanese counterpart over geopolitical events such as global conflicts that may have an effect on monetary policy as well as rising oil prices and inflation concerns.

The BOJ raised policy rates to 1 percent in June and in the last two weeks, dealers had increasing odds placed on another increase in September.