Story
Yen Rebounds From 160 Level After Minister Cites US Concern Over Weakness
Summary
The Japanese yen snapped a five-day losing streak after Japan's finance minister revealed that U.S. officials had voiced concerns over the currency's weakness, stoking intervention fears. The U.S. dollar remained broadly supported by high Treasury yields and Fed rate hike expectations.
The Japanese yen rallied sharply on Friday, pulling back from the brink of the key 160 per dollar level after Japan's finance minister disclosed that U.S. President Donald Trump had recently expressed concern over the currency's persistent weakness.
The yen strengthened 0.8% to trade at 157.72 against the dollar, snapping a five-day losing streak. The move marked its largest single-day gain in over two weeks, though the currency remains on track for a 0.7% loss for the week.
Tokyo Signals Unease Over Weak Currency
The market's sentiment shifted following a press conference where Finance Minister Satsuki Katayama revealed details of a September 22 meeting between Japanese Prime Minister Sanae Takaichi and U.S. President Donald Trump in New York.
According to Katayama, President Trump expressed his concern about the yen's continued decline. In response, Prime Minister Takaichi reportedly stated that the "undervalued yen is a problem." Katayama also confirmed that Tokyo remains in close communication with U.S. Treasury Secretary Scott Bessent to address excessive exchange rate volatility, heightening investor speculation about potential coordinated market intervention.
Dollar Strength Remains Dominant Theme
AdDespite the yen's rebound, the U.S. dollar's broader strength continued to be the dominant theme in foreign exchange markets. The U.S. Dollar Index held near a two-month high, poised for its second consecutive weekly gain with a 0.8% rise.
The dollar's momentum is supported by soaring U.S. Treasury yields, with the 10-year yield holding near 5.185% and the 30-year yield reaching 5.472%. A series of strong economic reports, including a drop in initial jobless claims to 197,000, has reinforced market expectations for the Federal Reserve to implement another 25-basis-point interest rate hike at its October meeting. The probability of such a move has risen to 70%, up from 50% a week ago, according to the CME FedWatch Tool.
Euro on Track for Third Weekly Loss
Elsewhere, the euro edged up 0.2% to $1.1440 but was set for a 0.8% weekly decline, its third straight week of losses. The currency continues to face pressure from the widening interest rate differential between the U.S. and Europe, as well as ongoing concerns about the region's energy reserves.
Market participants are now looking ahead to remarks from New York Fed President John Williams and Bank of England Governor Andrew Bailey for further signals on the future path of monetary policy.
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