The yen posted its biggest daily gain against the dollar since September 7 after Japan reaffirmed the US-Japan stance behind July's joint currency intervention. The dollar eased broadly as oil prices fell, though it remained on track for a second straight weekly advance on growing Fed rate hike bets.
The yen strengthened 1.09% against the dollar to 157.13, snapping a four-day streak of declines. Japan's Finance Minister Satsuki Katayama said US President Donald Trump raised concern about yen weakness during a summit with Japanese Prime Minister Sanae Takaichi earlier this week.
Japan repeats its intervention warning
Katayama said the remarks reaffirmed the shared US-Japan stance behind July's joint currency intervention, adding that she and Treasury Secretary Scott Bessent would stay in close contact as policymakers step up warnings over renewed yen weakness. Still, the yen remained on track for a second weekly fall, after markets judged the Bank of Japan's rate hike last week to a 31-year high and its latest guidance as insufficiently hawkish.
Dollar cools as oil retreats, but weekly gain still intact
The dollar index, which measures the currency against five others, fell 0.34% to 100.95, its biggest daily percentage drop since September 3. The greenback was on track to snap a four-day streak of gains as crude prices fell more than 1%, even though oil remained above $100 a barrel.
Yet the dollar still heads for its second straight weekly advance. Comments from central bank officials flagging inflation concerns and support for more rate increases after last week's 25-basis-point rate hike have boosted market expectations for a more aggressive path of monetary policy. According to Eugene Epstein, head of trading and structured products at Moneycorp: "maybe it's a little stretched, just taking a little breather".
Expectations for a Fed rate hike at its October meeting stood at about 66%, according to CME FedWatch, up from about 58% a week earlier. New orders for US-manufactured capital goods increased more than expected in August, while the prior month's data was revised sharply higher, pointing to another quarter of robust business spending. The University of Michigan's Consumer Sentiment Index also ticked up to 48.1 from 47.8, above the 47.6 estimate from economists polled by Reuters.
Sterling and yuan move on separate drivers
Sterling strengthened 0.24% to $1.3247, supported by hawkish comments from Bank of England Governor Andrew Bailey, though it stayed close to a three-month low hit on Thursday. Elsewhere, the dollar strengthened 0.14% to 6.725 against the offshore Chinese yuan, as a Trump-Xi summit in Washington showed no signs of breakthroughs on issues such as AI, trade, Taiwan and the Iran war.
Source: Investing.com
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