Dollar Drops Amid Global Economic Shifts

The dollar plunged to a seven-week low as investors anxiously awaited U.S. jobs data revisions, potentially indicating a tougher employment landscape than previously believed, encouraging further Federal Reserve rate cuts. The dollar fell 0.7% against the yen, reaching its weakest since mid-August, as sterling rose 0.2% to $1.3558.

Boosting the yen was a Bloomberg report suggesting Bank of Japan officials are pondering another interest rate hike this year, amid ongoing political volatility. Samy Chaar, chief economist at Lombard Odier, confirmed that Tuesday's market dynamics reflected anticipated shifts in BoJ policy.

Preliminary U.S. employment data revisions could imply an 800,000-job cut, suggesting the Fed may be lagging in its employment goals. Despite possible heightened rate cut expectations, upcoming inflation figures could temper these forecasts. Traders now eye more aggressive Fed moves, with increased speculations of policy easing lifting gold prices to new heights.

(With inputs from agencies.)