The US Dollar weakened against most major currencies on Wednesday after signals emerged that Washington could be close to reaching a deal with Iran.
At the same time, the Japanese Yen surged to its strongest level in over two months as traders anticipated possible intervention from Japanese authorities.
The Yen jumped as much as 1.8% in a rapid move, pushing the Dollar down to a session low of around 155 Yen, its weakest point since 24th February. Earlier in the day, the Dollar had been broadly stronger across currencies, but it suddenly reversed against the Yen, fuelling speculation that Japanese officials may have stepped in again to support the currency.
Earlier in the week, Japanese Finance Minister Satsuki Katayama cautioned against speculative activity in the foreign exchange market, following a brief surge in the Yen that drove renewed speculation that Tokyo may have stepped in again to support the currency, Reuters reports.
“As I have said repeatedly, we will take decisive measures against speculative moves, in accordance with the statement signed between Japan and the United States last year,” Katayama commented.
Most major currencies also climbed further as the Dollar remained under pressure. The move followed comments from US President Donald Trump, who said he would temporarily suspend an operation to help escort vessels through the Strait of Hormuz, pointing to progress toward a broader agreement with Iran.
The remarks came soon after US Secretary of State Marco Rubio stated on Tuesday that the United States had already met its key objectives in its military campaign against Iran.
In commodity markets, oil prices declined on Wednesday, with Brent crude dropping more than 2.5% to about $106 per barrel.
The Euro gained 0.4% to $1.1735, while Sterling also rose by 0.4% to $1.3598.
Meanwhile, the Australian Dollar climbed 0.8% to around $0.724, reaching its highest level in four years. The move came after the Reserve Bank of Australia’s decision the previous day to raise interest rates for the third time this year, which supported the currency.
Markets are now focusing on this week’s US non-farm payrolls report, which investors see as a key signal of the economy’s strength. The data will help determine whether growth is solid enough for the Federal Reserve to keep interest rates unchanged, or whether a weakening labour market could reopen expectations for rate cuts.