The U.S. dollar index dropped to a seven-week low on Wednesday as hopes grew for a deal to reopen the Strait of Hormuz. The yen held onto most of last week's intervention-driven gains near 157 per dollar, while Bank of Japan minutes showed policymakers split over the pace of further rate hikes.
The U.S. dollar index dropped 0.2% to 99.68 on Wednesday, its lowest level since June 16, amid hopes of progress toward a deal to reopen the Strait of Hormuz. The USD/JPY pair eased to 157.69, holding most of the ground the yen gained after last week's coordinated intervention.
Yen holds near 157 as BoJ flags rate-hike pressure
Its steadiness at 157.69 follows the first joint buying of yen by Washington and Tokyo since 2011. Treasury Secretary Scott Bessent confirmed the intervention this week. It marked the first time the U.S. has specifically intervened to strengthen the yen since 1998. Before that move, the yen had slid to a four-decade low against the dollar.
Minutes from the Bank of Japan's June meeting, released Wednesday, showed two of the eight board members pushed for a faster pace of interest-rate hikes, with policymakers expecting growth to decelerate and inflation to rise because of the Middle East oil shock. According to Deutsche Bank's Jim Reid: "faster BoJ hikes as necessary for a more sustained recovery in the yen"
Hormuz hopes and soft US data weigh on the dollar
The dollar's slide also reflects growing optimism over the Hormuz talks. President Donald Trump said Tuesday that a deal was close and that the outcome would be known within 48 hours, while Iran's foreign ministry said a joint statement with Oman was in its final drafting stage, provided other parties do not disrupt the process.
At home, U.S. private employers added 44,000 jobs in July, well below the 68,000 forecast and down from 95,000 in June, according to ADP data. The report follows softer June job-openings figures released Tuesday and comes ahead of Friday's nonfarm payrolls release. Meanwhile, the ISM services index rose to 54.1 in July from 54 in June, just under the 54.5 forecast. Its prices gauge stayed above 70 for the fourth time in five months.
Source: Investing.com
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