Published by Global Banking and Finance Review
Posted on November 26, 2025
By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) -The yen weakened against the dollar on Wednesday, after an initial boost from speculation about a possible Bank of Japan rate hike next month faded, while sterling advanced on a UK budget that offered a larger-than-expected fiscal buffer.
The dollar fell as investors maintained expectations that the Federal Reserve will cut interest rates at its December meeting, as a mixed set of economic indicators did little to alter that outlook.
The yen has been on the market's radar for some time, as investors remain alert for the possibility of Japanese intervention to boost the weakening currency.
The BOJ is preparing markets for a possible interest rate hike as soon as next month, sources told Reuters, reviving previous hawkish language as worries about sharp yen declines return and political pressure to keep rates low fades.
The yen initially rose against the dollar after the Reuters report of a possible rate hike, before reversing course. It was last down 0.2% at 156.44 per dollar, having earlier hit an intraday high of 155.66.
"It's going to be hard to significantly change the trajectory of the yen with just one hike unless the BOJ delivers a hawkish hike and commits to raising rates consistently through 2026 to bring inflation under control," said Vassili Serebriakov, FX strategist at UBS in New York.
"Unless that happens, I don't think the yen is going to benefit significantly because the rate differentials between the U.S. and Japan are still quite wide and volatility is still low."
The yen has been under pressure from worries about Japan's worsening fiscal position.
"There is a possibility of intervention over Thanksgiving, but if the market's fear of intervention is sufficient to stop dollar/yen from rising, it sort of reduces the possibility," said Jane Foley, head of FX strategy at Rabobank London.
The pound was also in focus with Britain's budget announcement.
British finance minister Rachel Reeves delivered a budget that will give her more room for meeting her borrowing targets, which calmed investor nerves.
In a figure closely watched by investors assessing Britain's borrowing risks, the Office for Budget Responsibility said the government will now have more than double its previous buffer for meeting its fiscal targets even as it raises spending on welfare.
Sterling was last up 0.5% on the dollar at $1.3228 and was also higher versus the euro, which slipped 0.3% to 87.64 pence..
DOVISH FED IN 2026?
In the United States, Karl Schamotta, chief market strategist at Corpay in Toronto, said the focus is on the "growing likelihood of a more aggressive easing campaign from the Fed."
Data showed that initial claims for state unemployment benefits dropped 6,000 to a seasonally adjusted 216,000 for the week ended November 22, the lowest since April. Economists polled by Reuters had forecast 225,000 claims for the latest week.
A separate report showed non-defense capital goods orders excluding aircraft, a closely tracked proxy for business spending, jumped 0.9% in September after an upwardly revised 0.9% increase in August.
The data, however, failed to bolster the dollar.
Investors are also betting that the reported leading candidate to be the next Fed chair may pursue a more dovish policy, adding to the U.S. currency's weak outlook.
Bloomberg News reported that White House economic adviser Kevin Hassett has emerged as the front-runner to be the new chair.
Hassett, like President Donald Trump, has said interest rates should be lower than they are under current Fed Chair Jerome Powell. U.S. Treasury Secretary Scott Bessent said on Tuesday there is a good chance Trump would announce his pick before Christmas.
"We have had three months without economic data from the U.S. and we're going to get a lot. ... Markets will be much more driven by actual fundamental data rather than an appointment for the Fed chair," said Ales Koutny, head of international rates at Vanguard in London.
U.S. rate futures have now priced in an 85% chance of a 25 basis-point move next month, according to the CME FedWatch tool.
Elsewhere, the euro last changed hands at $1.1590, up 0.2%.
The New Zealand dollar jumped after the country's central bank cut its interest rate to 2.25% as expected, but signaled an end to the easing cycle as the economy showed early signs of recovery.
The kiwi rose 1.3% to US$0.5695, after earlier hitting a three-week high, as traders reduced expectations for further rate cuts.
The Australian dollar rose 0.7% to US$0.6517 after Australian inflation accelerated for a fourth straight month in October, closing the door to further policy easing.
Currency
bid
prices
at 26
November
07:24
p.m. GMT
Descript RIC Last U.S. Pct YTD High Low
ion Close Chang Pct Bid Bid
Previous e
Session
Dollar 99.606 99.858 -0.24 -8.19% 99.961 99.
index % 552
Euro/Dol 1.1591 1.1569 0.2% 11.97% $1.160 $1.
lar 1 154
7
Dollar/Y 156.47 156.075 0.26% -0.56% 156.71 155
en .75
Euro/Yen 181.39 180.54 0.47% 11.13% 181.45 180
.36
Dollar/S 0.8045 0.8078 -0.42 -11.36 0.8083 0.8
wiss % % 041
Sterling 1.3232 1.3165 0.53% 5.82% $1.323 $1.
/Dollar 8 312
5
Dollar/C 1.4038 1.4099 -0.44 -2.38% 1.4105 1.4
anadian % 036
Aussie/D 0.6516 0.6469 0.76% 5.34% $0.652 $0.
ollar 1 646
8
Euro/Swi 0.9324 0.9341 -0.18 -0.73% 0.9347 0.9
ss % 322
Euro/Ste 0.8757 0.8788 -0.35 5.85% 0.8818 0.8
rling % 755
NZ 0.5693 0.5621 1.31% 1.77% $0.569 0.5
Dollar/D 7 619
ollar
Dollar/N 10.199 10.2152 -0.16 -10.27 10.256 10.
orway % % 1 192
6
Euro/Nor 11.8205 11.8315 -0.09 0.44% 11.858 11.
way % 812
9
Dollar/S 9.5004 9.5262 -0.27 -13.77 9.5454 9.4
weden % % 899
Euro/Swe 11.0117 11.0251 -0.12 -3.97% 11.044 11.
den % 4 004
(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Ozan Ergenay in London and Rae Wee in Singapore; Editing by Raju Gopalakrishnan, Mark Potter and Leslie Adler)
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