The USD is mostly higher vs the major currencies with one exception, the JPY. The USD is lower vs the JPY as the pair continued its fall last week after reported intervention, and cracked below the 200 day MA for the first time since October 2025.
The Bank of Japan’s July money market data suggests Japan conducted approximately ¥5.3 trillion in currency intervention on Friday to support the yen. The reported liquidity shortfall of around ¥11.4 trillion is consistent with a large-scale intervention operation. The intervention was notable because it appears to have been a rare coordinated effort between Japan’s Ministry of Finance and the U.S. Treasury Department—the first such joint yen-buying operation since 2011.
The USDJPY is down an additional -0.58% (lower USD). The EURUSD is near unchanged. The GBPUSD is lower by -0.10% (higher USD) to kickstart the new trading day, week and even month.
IN middle east news:
Diplomacy is back on the table
- President Trump said planned U.S. military action was called off in favor of diplomacy and announced that talks with Iran are expected to begin Monday.
- However, Iran publicly denied that formal negotiations with the United States have been scheduled, creating uncertainty over whether meaningful talks will actually occur.
2. Strait of Hormuz remains the key issue
- The biggest focus continues to be reopening commercial shipping through the Strait of Hormuz.
- Iran has acknowledged discussions with Oman regarding shipping arrangements, but there is no finalized agreement.
- Shipping traffic remains well below normal, and isolated security incidents continue to pose risks.
3. Israel remains cautious
- Israeli officials continue to indicate they are prepared to act if they believe Iran resumes its nuclear or missile programs.
- Even if U.S.-Iran diplomacy advances, Israel is signaling it will retain freedom to conduct military operations if necessary.
4. Oil markets are reacting positively
- Oil prices fell sharply as traders reduced the probability of an immediate military escalation.
- The market is beginning to price in the possibility that shipping disruptions could ease if diplomacy gains traction, although a sizable geopolitical risk premium remains.
Crude oil is trading at $79.10, down -$5.54 on the day.
New York Fed President John Williams reinforced the Federal Reserve’s current policy stance, saying the July decision left interest rates “well positioned” to return inflation to the Fed’s 2% target. He stressed that the Fed remains fully committed to price stability and will act if inflation fails to move sustainably back toward target, while expressing confidence that inflation pressures should continue to ease over time. Williams acknowledged uncertainty stemming from the Middle East conflict but expects any inflationary impact to moderate. On market expectations, he emphasized that while the Fed closely watches market pricing because it provides valuable information, policymakers are not obligated to validate or follow those expectations. Overall, the comments were consistent with Williams’ typically centrist approach, offering no new policy signal and leaving future decisions dependent on incoming economic data and evolving geopolitical developments.
US stocks are mixed changed in pre-market futures trading:
- Dow is the biggest gainer with a rise of 456 points
- S&P is up 25 points
- Nasdaq s down -26 points.
In the US debt market, yields have cracked to the downside:
- 2-year 4.237%, -5.3 basis points.
- 5-year 4.389%, -7.1 basis points
- 10-year 4.677%, -6.7 basis points
- 30-year 5.224%, -5.08 points
This article was written by Greg Michalowski at investinglive.com.