The dollar climbed to a one-week high on Thursday as safe-haven demand and rising Treasury yields lifted the greenback, while the yen weakened past 158 per dollar for the first time since last week's coordinated intervention. A disputed Strait of Hormuz reopening plan and Friday's jobs report are also driving the moves.
Dollar firms as a Hormuz plan stalls oil's slide
The U.S. dollar index, which tracks the greenback against six major peers, rose 0.3% to 99.94 on Thursday, having hit a seven-week low in the previous session. The dollar had slipped earlier in the week as investors piled into equities, lifting Wall Street out of a soft July on hopes for a deal to reopen the Strait of Hormuz, which had pressured oil prices.
But crude reversed after a media report that an Iranian-Omani framework for reopening the strait would bar U.S. vessels from passage until compensation is paid. Iran's Fars News, citing parliament member Alireza Salimi, said the initial text of the plan remains under review by authorities. Under the framework, entry would run through a northern corridor near Iran's coast and exit through a southern corridor near Oman's, before both routes close after a specified deadline in favor of a middle corridor jointly managed by Iran and Oman.
President Trump said earlier this week that he called off a planned attack on Iran given progress toward a deal, though he warned the U.S. remained prepared to act if no agreement is reached.
Rate jitters build ahead of payrolls
Rising Treasury yields also supported the dollar as traders sold government bonds ahead of Friday's July nonfarm payrolls report. This week's labor data has been mixed. June job openings growth came in lower than expected and slowed from May. July private employment growth decelerated from June. Initial jobless claims, though, stayed below 200,000 for a third straight week, a streak not often seen since the late 1960s.
Interactive Brokers economist José Torres expects a fourth straight month of decelerating hiring, projecting a July headline of 40,000 jobs as labor-force participation shrinks and wage pressures build. That resilience backs the Federal Reserve's recent shift toward focusing more on its inflation mandate, even as Middle East oil-price volatility divides policymakers on the path for rates.
Yen tops 158 despite last week's intervention
The USD/JPY pair rose 0.4% to 158.39 on Thursday, breaching 158 for the first time since a landmark currency intervention. Treasury Secretary Scott Bessent confirmed this week that Washington had joined Japan in buying yen for the first time since 2011 and the first U.S. move to strengthen the yen since 1998, telling CNBC on Tuesday that a weaker yen risked destabilizing markets across Asia.
Before the intervention, the yen had slid to a 40-year low of 164 against the dollar. A weaker yen strains Japan's import-heavy economy; to defend it, authorities typically sell U.S. Treasury bonds — Japan is the largest foreign holder — to raise cash for the purchases. According to RSM US chief economist Joseph Brusuelas: "The intervention needs to be followed up by real policy change in Japan."
Source: Investing.com
Trading involves risk.
Risk Disclaimer
