In the New York market, dollar-yen briefly rose from the upper ¥159 range and broke above ¥160, closing at ¥160.09. The break above ¥160 heightened concerns over currency intervention, while the Fed's rate outlook and remarks from Treasury officials drove the market.
In the New York foreign exchange market on the 28th, dollar-yen weakened to ¥159.41 before rising to ¥160.20 and closing at ¥160.09. After the release of US economic data, the dollar was bought as Fed remarks strengthened expectations of a rate hike.
At a speech by Fed Chair Warsh (ウォーシュ), he said inflation needs to improve toward the target at a sufficient pace. The resulting increase in the probability of a September rate hike shifted expectations reflected in FedWatch. Meanwhile, Treasury Secretary Bessent's (ベッセント) letter prompted growing concern over excessive moves in the yen.
The break above ¥160 further heightened concerns over intervention by the government and the Bank of Japan, while remarks signaling the authorities' efforts to restrain the market have increased tensions.
Persistent yen selling driven by concerns over Japan's deteriorating fiscal position is also a factor. Although many market participants see little chance of a sustained period of dollar weakness and yen strength, the ¥160 level is being watched as a line of defense, and they expect conditions in which gains are likely to remain capped.