Dollar Falls as Yen Rises Amid Suspected Japanese Intervention
The U.S. dollar index (DX-Y.NYB) fell to a six-week low on Thursday, dropping by -0.99% amid weaker-than-expected Q2 GDP growth and easing core PCE inflation data that signaled potential dovishness from the Federal Reserve. The yen surged against the dollar after suspected intervention by Japanese authorities in forex markets aimed at supporting its value. The euro also gained strength as EUR/USD rose to a six-week high of +0.55%, buoyed by weaker U.S. economic data and stronger-than-expected Eurozone GDP growth (+0.4% q/q) and rising consumer confidence. Meanwhile, the yen's rally was further supported by Japan’s improved July consumer confidence index and anticipation ahead of Friday’s Bank of Japan (BOJ) meeting. Market expectations remain for a 64% chance of a +25 basis point rate hike at the next FOMC meeting in September, while the ECB is seen with an 84% probability to raise rates by the same amount. The yen's recent weakness had been driven partly by fiscal concerns and negative interest differentials.
Topics: central bank intervention economic data foreign exchange