The U.S. dollar reversed earlier gains against the yen on Thursday as traders doubted that the Bank of Japan (BOJ) would be able to weaken the yen with more policy stimulus, while profit-taking and gains in commodity currencies also weighed on the greenback.
The dollar rose against the yen in morning U.S. trading on expectations the BOJ could ramp up its monetary stimulus after reports in recent days that the central bank could turn more accommodative.
Doubts over the BOJ's ability to weaken the yen through maneuvers such as steepening the bond yield curve, however, quickly overshadowed those expectations. Traders are also awaiting a Federal Reserve policy meeting on Sept. 20-21, the same dates as the BOJ meeting.
"There are legitimate doubts about the extent to which the BOJ can influence the value of the yen, even with additional policy easing," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.