Dollar Weakens, Markets Focus on Japanese Intervention
The US dollar weakened against most major currencies on Wednesday (May 6), after Washington signaled a closer agreement with Iran. This sentiment dampened demand for the dollar as a safe haven, while the Japanese yen surged sharply to its highest level in more than two months.
The yen briefly strengthened by 1.8%, sending the USD/JPY pair down to around 155, the dollar's weakest level against the yen since February 24. This rapid movement fueled speculation that Japanese authorities would intervene again to support its currency.
Japanese Finance Minister Satsuki Katayama previously warned the market against speculative movements in the foreign exchange market. He emphasized that Japan is ready to take decisive action if the yen's weakening becomes too extreme, in line with a joint statement between Japan and the United States last year.
Pressure on the dollar also increased after US President Donald Trump said he would temporarily suspend operations to assist ships passing through the Strait of Hormuz due to progress toward a comprehensive agreement with Iran. This statement sent oil prices down, with Brent weakening more than 2.5% to around US$106 per barrel.
Other major currencies also strengthened against the dollar. The euro rose 0.4% to US$1.1735, the pound sterling strengthened 0.4% to US$1.3598, while the Australian dollar rose 0.8% to US$0.724, approaching a four-year high after the Reserve Bank of Australia raised interest rates again.
Market focus now shifts to this week's US non-farm payrolls release to assess whether the American economy remains strong enough or whether the Fed is opening up the door to further interest rate cuts.
Source: newsmaker.id
