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Yen Stabilizes After Joint US-Japan Intervention; Dollar Hits 6-Week Low
The Japanese yen held firm on Wednesday following a rare joint intervention by Japanese and U.S. authorities to support the currency. The move, combined with a broader decline in safe-haven demand, pushed the U.S. dollar to a six-week low against a basket of major currencies.
Coordinated Intervention Halts Yen's Slide
Last Friday, Tokyo and Washington took coordinated action to buy the yen, marking the first time U.S. authorities have directly intervened to purchase the Japanese currency since 1998. The intervention triggered a sharp rally for the yen, which had recently fallen to a 40-year low of 164 per dollar. By Monday, the currency had strengthened to 155.2 per dollar and was last trading at 157.53.
Underscoring the official support, U.S. Treasury Secretary Scott Bessent stated on Tuesday that the United States would do "whatever it takes" to support Japan's efforts to stabilize its currency, according to Investing.com. The comment echoed former European Central Bank President Mario Draghi's pivotal 2012 pledge to defend the euro.
Broader Dollar Weakness
AdThe U.S. dollar's decline was not limited to its pairing with the yen. The greenback weakened against other major currencies as risk sentiment improved. According to the source, this was partly driven by renewed hopes for a resolution to the conflict in Iran, which has reduced demand for the dollar as a safe-haven asset.
Market Outlook
Investors are now turning their attention to the upcoming U.S. monthly employment report, scheduled for release on Friday. The jobs data is a critical indicator of economic health and will be closely watched for its potential influence on the Federal Reserve's near-term monetary policy. A significant deviation from expectations could shift interest rate forecasts and introduce fresh volatility into currency markets.
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