Dollar slides as oil falls, yen climbs after Japan-US intervention comments
The U.S. dollar fell on Friday as oil prices dropped, while the yen rose after Japan’s finance minister said Tokyo and Washington remain committed to their joint intervention stance.
On Friday the U.S. dollar weakened, breaking a four-day run of gains as global oil prices dropped over 2%, though barrels remained above $100, sustaining inflation concerns. The decline followed remarks by Japanese Finance Minister Satsuki Katayama that Japan and the United States stay committed to the joint intervention stance announced in July, prompting the yen to climb roughly 1% against the dollar. Federal Reserve officials, including Cleveland Fed President Beth Hammack, highlighted rising inflation worries and the chance of another rate hike before year-end, which helped push Treasury yields higher and kept the dollar on track for a second weekly rise.
The euro rose modestly to $1.1396, while the pound gained slightly but stayed near a three-month low after hawkish remarks from Bank of England Governor Andrew Bailey. Moneycorp’s Eugene Epstein described the dollar’s recent rally as possibly overstretched and now taking a brief pause. The yen’s gain marked its biggest daily rise since early September, even as markets still view the Bank of Japan’s recent rate hike as insufficiently hawkish.
Why it matters
Currency moves affect import costs, inflation and investors worldwide.
How this story developed
- Sep 7 U.S. interest costs hit $1.25 trillion, consuming nearly one-fifth of federal revenue
- Sep 16 The Federal Reserve announced a quarter-point increase in its benchmark rate, marking the first hike since the previous administration and the first under Chair Kevin Warsh.
- Sep 16 The Fed announced a quarter‑point increase to its key interest rate.
- Sep 17 In its first rate increase since 2023, the Fed lifted the policy rate by a quarter point to a 3.75-4.00% range, with every governor supporting the decision. Market participants interpret the action as a more hawkish stance, prompting concerns for rate-sensitive assets such as small-cap stocks. The lack of clear forward guidance from new chair Kevin Warsh adds to uncertainty, while forecasts point to at least one additional hike this year and a pause in 2027.
- Sep 17 Fed increased the federal funds rate by 25 basis points to a 3.75‑4 percent target range in its first hike since 2023, with a 12‑0 vote.
- Sep 18 Fed officials indicated that at least one more 0.25‑point rate increase may be implemented before year‑end.
- Sep 20 The Fed implemented a modest rate increase and a hawkish tone from the new chair.
- Sep 25 Treasury yields have risen, pushing interest costs to consume nearly one‑fifth of revenue.
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