Forex▼ Bearish
US-Japan Yen Intervention Sends Dollar to Multi-Month Low
The dollar posted its worst monthly performance since April after the US joined Japan in coordinated yen intervention, with $54 billion spent on the first day alone.
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The dollar posted its worst monthly performance since April. Doubts mounted over Kevin Warsh's hawkish reputation and the US pivot from air strikes to diplomacy in the Middle East. Speculators unwound net long positions that had been at record levels since 2015, according to CFTC data. The USD index fell even as Treasury bond yields stayed elevated. The simultaneous sell-off of the currency and Treasuries points to waning confidence in White House and Fed policy, traders said.
Investors are focused on US participation in coordinated currency interventions with Japan. Over three trading days, USDJPY plunged to its lowest level since early May. The scale of intervention on the first day alone is estimated at $54 billion. Washington has made no secret of its presence in the forex market. Treasury Secretary Scott Bessent said the Treasury "would not hesitate" to re-enter the foreign exchange market. President Donald Trump described the intervention as a sign of friendship with Tokyo.
The Bank of Japan did not need hawkish rhetoric to strengthen the yen, keeping its overnight rate at 1%. Governor Kazuo Ueda said greater attention needed to be paid to accelerating price growth. Traders said the statement signaled that the BoJ would tighten policy in the autumn. Most Bloomberg economists expect a move before December.