The dollar weakened to its lowest level in six weeks, while the yen remained above 157 after the US fully supported intervention.

The dollar weakened to its lowest level in six weeks, while the yen remained stable above 157 yen per dollar, supported by joint Japan-U.S. intervention.

On August 5, 2569, at 08.59:6 AM, Reuters reported that the yen held steady in Wednesday's trading (August 5), supported by joint foreign exchange market intervention measures between Japan and the United States last week. Meanwhile, the US dollar weakened to near its lowest level in six weeks amid hopes of a resolution to the conflict in the Middle East, which pressured oil prices and eased inflation concerns.

The yen traded at 157.60 yen per dollar, slightly stronger after weakening about 0.4% from Monday's high of 155.20 yen per dollar. However, the yen remains stronger than its weakest level in over 40 years, at around 164 yen per dollar, a level that prompted Japanese authorities to intervene in the market.

A key boost came from U.S. Treasury Secretary Scott Basescent's assurance that the U.S. would do everything possible to support Japan's efforts to stabilize the yen, following the joint yen-buying intervention by both countries last week. This prompted investors who had bet on a yen weakening to quickly close their positions.

Bescent also expressed confidence that Kazuo Ueda, Governor of the Bank of Japan (BOJ), will pursue the most appropriate policies for the Japanese economy, consistent with his earlier signals supporting interest rate hikes. This has increased market expectations that the BOJ may raise interest rates at its September 17-18 meeting.

Analysts from IG stated that US support enhances the credibility of currency intervention and signals the possibility of further joint measures in the future, giving Japanese authorities the tools to support the yen while waiting for economic fundamentals to improve.

The US dollar index, which measures the dollar's value against six major currencies, traded at 99.85, near its lowest level in six weeks, following a continued decline in oil prices.

Brent crude oil prices fell another 0.3% in early trading today, after dropping more than 5% the previous day, amid hopes that negotiations between the US and Iran would resolve the conflict and allow oil shipments through the Strait of Hormuz to return to normal.

Officials from Qatar and the United States have stated that negotiations to end the conflict are progressing, leading investors to gradually reduce the risk premium that was previously reflected in oil prices.

The drop in oil prices also pushed the yield on 2-year U.S. Treasury bonds, which are sensitive to interest rate movements, close to its lowest level in two weeks, as investors reduced their expectations that the Federal Reserve (Fed) would raise interest rates at its September meeting.

Data from the CME FedWatch Tool indicates that the probability of the Fed raising interest rates at its September meeting has fallen to 60% from 75% a week ago.

Following the easing of geopolitical tensions, market attention is shifting to the U.S. nonfarm payrolls data to be released this Friday. This data will be crucial in assessing the economic outlook and the Federal Reserve's monetary policy for the remainder of the year.

Analysts believe that if employment figures are weaker than expected, it could further reduce pressure on the Fed to raise interest rates, potentially putting downward pressure on the dollar in the short term. Meanwhile, the yen could receive further support if Japan continues to receive backing from the US in maintaining currency stability.

Reference: www.reuters.com

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