Dollar Drops on Yen Intervention Risk, Gold Rises: Markets Wrap
(Bloomberg) — The dollar fell against most of its major peers as potential US involvement in foreign-exchange intervention in Japan hurt sentiment toward the world’s reserve currency. Gold rose above $5,000 for the first time on haven demand.
The Bloomberg Dollar Spot Index slid as much as 0.5% to the lowest level since September after a rate check Friday by the Federal Reserve Bank of New York spurred speculation the US may assist Japan in efforts to weaken the greenback versus the yen. Japan’s currency jumped as much as 1.2%. Equity-index futures indicated modest losses for the US and Europe.
Meanwhile gold extended a breakneck rally fueled by President Donald Trump’s reshaping of international relations and investor flight from sovereign bonds and currencies. Silver jumped more than 6% to a record high.
The volatility in foreign-exchange markets comes as Japan’s top currency chief Atsushi Mimura said authorities in Tokyo will respond in close coordination with their counterparts in Washington. Earlier, Japan’s Prime Minister Sanae Takaichi warned markets that the government is ready to take action.
“The bigger signal is policy coordination,” said Daniel Baeza, senior vice president at Frontclear. “If markets interpret coordination as a willingness to tolerate easier global dollar conditions, especially alongside a dovish Fed reaction function, that could reinforce short-term dollar downside.”
Traders interpreted the New York Fed’s actions as an indication the central bank was preparing to assist Japanese officials in intervening directly in the currency market to prop up the yen. The dollar fell the most since May last week amid unpredictable US policymaking, tariff tensions between the US and Europe, and attacks on the Federal Reserve’s independence.
Over the weekend, concerns also rose about another US government shutdown, while Trump threatened 100% tariffs on imports from Canada.
In other corners of the market, Treasuries edged higher amid tariff threats and rising geopolitical tensions. Equity gauges fell in Japan, South Korea and Hong Kong.
Asian currencies benefited from the weak dollar with the Malaysian ringgit rising to the strongest level since 2018, and the South Korean won climbing to its highest level in about three weeks. Singapore’s currency advanced to its strongest level since 2014.
Attention is turning to the dollar and Japan once again after a surge in the Asian nation’s bond yields last week unsettled global fixed-income markets. The coming days are pivotal for investors as the Fed prepares to deliver its policy decision and megacaps including Microsoft Corp. and Tesla Inc. report earnings.
For many dollar watchers, signs of US support to boost the yen reopen the debate about potential coordinated foreign-exchange intervention to guide the greenback lower against the currencies of its key trading partners.
The thinking goes that such a pact would help American exporters compete with rivals such as China and Japan.
“If the New York Fed chooses to join in, then that would amplify the yen rally,” said Gareth Berry, a strategist at Macquarie Bank Ltd. in Singapore. “And not just for symbolic reasons. Japan has lots of USD to sell, but the NY Fed has an infinite amount. It would also be interpreted as a sign that Trump wants a weaker dollar more generally.”
What Bloomberg strategists say…
The growing risk of another partial government shutdown will reinforce the self-feeding dynamic to increase diversification away from the greenback and US assets. The US dollar’s selloff will accelerate as foreign investors increase their currency-hedging ratios and now that the yen depreciation trend has been stalled via action from officials.
— Mark Cudmore, MLIV Executive Editor. For full analysis, click here.
Over the weekend, concerns about another US government shutdown increased as Senate Democratic leader Chuck Schumer vowed to block a massive spending package unless Republicans strip funding for the Department of Homeland Security.
Traders are also paying attention to geopolitical tensions after Trump dispatched naval assets to the Middle East, prompting fresh speculation that he’ll follow through on threats to attack Iran’s senior leadership amid a violent crackdown on nationwide protests. Brent crude edged higher, building on gains from Friday, to trading just above $66 a barrel.
Corporate Highlights:
Ryanair Holdings Plc raised its full-year guidance for passenger growth and fares. Volkswagen AG won’t go ahead with a planned Audi factory in the US unless automotive tariffs are reduced, Chief Executive Officer Oliver Blume told Germany’s Handelsblatt newspaper. SoftBank Group Corp. has halted talks about an acquisition of US data center operator Switch Inc. Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.1% as of 6:53 a.m. London time Nasdaq 100 futures fell 0.2% The MSCI Asia Pacific Index rose 0.4% Hong Kong’s Hang Seng was little changed The Shanghai Composite was little changed Euro Stoxx 50 futures fell 0.1% Currencies
The Bloomberg Dollar Spot Index fell 0.4% The euro rose 0.3% to $1.1859 The Japanese yen rose 1% to 154.10 per dollar The offshore yuan was little changed at 6.9544 per dollar The British pound rose 0.2% to $1.3664 Cryptocurrencies
Bitcoin rose 1.6% to $87,842.53 Ether rose 2.4% to $2,883.53 Bonds
The yield on 10-year Treasuries declined one basis point to 4.21% Japan’s 10-year yield declined two basis points to 2.235% Australia’s 10-year yield was little changed at 4.82% Commodities
Spot gold rose 2.3% to $5,101.51 an ounce West Texas Intermediate crude rose 0.8% to $61.53 a barrel This story was produced with the assistance of Bloomberg Automation.
–With assistance from Winnie Hsu.
©2026 Bloomberg L.P.
