Dollar wobbles as Treasury's bond market buybacks raise fresh concerns

The Japanese yen JPY=EBS rose 0.21% against the dollar to 158.72 after data showed core consumer inflation had accelerated in July, bolstering the case for a rate hike by the Bank of Japan.

U.S. and Japanese authorities propped up the yen through joint intervention last month, but investors say the Japanese currency could resume its decline unless the BOJ tightens policy.

"The yen is certainly salvageable, but it's not a one-way train," said Roosevelt Bowman, senior investment strategist at Bernstein Private Wealth.

"Given that growth and inflation have at least firmed somewhat in Japan, if the BOJ policy was seen as more symmetric, with the central bank pushing against any inflationary pressures, it would help the yen."

Rate increases typically support a currency. The BOJ's next policy meeting is on September 17 and 18.