Yen Retreats After Intervention; Markets Await US Jobs Data and Hormuz Deal

Currency markets traded in narrow ranges on Thursday, with the Japanese yen retreating slightly from recent gains following intervention by Japanese authorities. The US dollar held near its lowest level in weeks, as traders monitored prospects for a possible agreement between the United States and Iran and prepared for the release of US nonfarm payrolls data on Friday.

According to Reuters, the yen slipped marginally to 157.85 per US dollar after modest declines over the previous two sessions. That move erased part of the currency’s advance following Tokyo’s intervention, which had pushed the yen as high as 155.20 per dollar on Monday. Still, the yen remains well off its multi-decade low of nearly 164 per dollar, reached in July.

Jonas Goltermann, chief emerging markets economist at Capital Economics, told Reuters that “the elevated positioning of speculators in the market, combined with US intervention and the yen’s historically undervalued status, could make this intervention more effective in supporting the currency than past efforts.”

Major Currency Moves

In major currency pairs, the euro fell approximately 0.1% to $1.1542, while the British pound declined by a similar margin to $1.3460. Conversely, the US Dollar Index — which measures the greenback against six major currencies — rose 0.1% to 99.77, rebounding from Monday’s six-week low of 99.64.

Focus Shifts to Gulf Diplomacy

Markets are closely watching developments in the Iran file after Reuters reported that a proposal has emerged between Iran and Oman aimed at helping resolve the dispute between Tehran and Washington. No immediate US comment was issued on the proposal.

Former US President Donald Trump stated that an agreement to reopen the Strait of Hormuz is imminent. However, US officials have repeatedly emphasized they will not accept any arrangement granting Iran control over access to the strategically vital waterway, through which a substantial share of global energy supplies passes.

Brent crude oil prices edged up modestly to around $80.20 per barrel but remain far below the $100 mark hit in July, when tensions between Iran and the United States peaked. Ray Attrill, head of foreign exchange strategy at National Australia Bank, noted that “markets have not recently experienced the volatility that characterized trading in prior weeks, driven by oil price dynamics.”

Russia Considers Alternative Rail Link to Indian Ocean

Russian Deputy Prime Minister Marat Khusnullin announced on Thursday that Russia needs to study building a railway connecting it to the Indian Ocean. The aim is to reduce risks to maritime navigation through the Bosporus and Strait of Hormuz. According to TASS, the proposed alternative route could run via Turkmenistan, Iran, Afghanistan, and Pakistan.

US Payrolls Report in Focus

Investor attention is now fixed on Friday’s US nonfarm payrolls report, expected to deliver fresh signals about the Federal Reserve’s interest rate path. The data follows indications of continued strength in the US services sector in July, alongside a slowdown in hiring pace. At its most recent meeting, the Fed held rates steady, with policymakers remaining divided on the next step.

The Federal Open Market Committee maintained interest rates unchanged last month. Fed Chair Jerome Powell reaffirmed his “strong commitment to reducing inflation,” leaving open the possibility of a rate hike in September.

Francesco Pesole, FX strategist at ING, stressed the heightened importance of economic data released after the Fed’s meeting, noting that the jobs report could directly influence dollar-yen movements: strong figures may prompt investors to rebuild long-dollar positions.

A Reuters survey of economists forecasts that the US labor market added 80,000 nonfarm jobs in July, up from 57,000 in June, with the unemployment rate holding steady at 4.2%.

Fed Officials Express Divergent Views

Earlier, Federal Reserve Governor Lisa Cook said she remains open to raising short-term interest rates if elevated inflation levels warrant such action. In contrast, Mary Daly, president of the Federal Reserve Bank of San Francisco, reiterated her support for holding rates steady at the July meeting and underscored the need for additional data ahead of the September decision.