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The US dollar steadied on July 6, 2026 after softer than expected US employment data damped bets on a near term Federal Reserve interest rate increase, according to a Reuters report. The Japanese yen traded around 162.3 per dollar, just above a four decade low of 162.84 touched the previous week that marked its weakest point since 1986. A sudden bout of buying had lifted the yen on Thursday but it quickly resumed its decline leaving traders on edge over possible steps by Tokyo to support the currency.
The Ministry of Finance spent a record 11.7 trillion yen equivalent to about 74 billion dollars on intervention operations during April and May 2026 in an effort to prop up the currency, ministry data shows. Finance Minister Satsuki Katayama stated in early July that authorities remained in close contact with US counterparts and stood ready to respond as needed to yen weakness. Despite those efforts analysts doubt intervention would deliver more than temporary relief given underlying interest rate differentials between Japan and the United States.
The dollar index which tracks the US currency against six major peers pulled back from a 13 month peak reached last week as expectations for a July rate hike by the Federal Reserve receded, Reuters figures show. Market participants now look to the release of minutes from the Federal Open Market Committee’s June meeting scheduled for Wednesday to gauge the policy outlook. City Index strategist David Scutt said the risk reward profile for the dollar index was no longer as one sided as it had been only a week earlier adding that he was shifting to a more neutral stance.
New Federal Reserve chair Kevin Warsh indicated last week that those anticipating an easy stance on inflation which has cooled somewhat could be disappointed, according to the Reuters dispatch. Scutt pointed to comments from Fed policymaker Christopher Waller who had previously described rate cuts as something only someone who was crazy would consider. Scutt described Waller as a lead indicator for the direction of the Federal Open Market Committee.
The euro stood at 1.142 dollars after slipping 0.14 percent while remaining close to two week highs, Reuters data placed sterling at 1.334 dollars following a 0.1 percent decline. The South Korean won eased 0.1 percent to 1,531 per dollar on the first day of expanded 24 hour onshore spot trading. Currency strategist Moh Siong Sim at OCBC Bank noted that hawkish Federal Reserve risks continued to weigh on the yen though intervention fears had limited further downside.
Sim added that in the near term the yen would likely remain under pressure while investors watched for signs that Japanese officials might abandon prior habits of telegraphing intervention risks in favour of more targeted action against speculators. Ben Bennett head of Asia investment strategy at L and G Asset Management told Reuters he expected authorities to step in if volatility rose but added that the yen’s direction reflected easy Japanese fiscal policy and the large rate gap with the United States. Bennett concluded that he did not believe intervention would alter that fundamental trajectory.
