Key facts
- The Japanese yen tested the 160 per dollar mark for the third straight session.
- Japanese officials issued verbal warnings against excessive yen volatility.
- The U.S. dollar index is on track for a weekly gain due to safe-haven demand.
- Brent crude futures rose above $90 per barrel amid escalating Gulf hostilities.
- The euro and British pound are heading for small weekly losses against the dollar.
- US nonfarm payrolls data is highly anticipated later in the global day.
The Japanese yen is testing the 160 per dollar mark for the third consecutive session, prompting warnings from Japanese officials, while the U.S. dollar is on track for a weekly gain as Gulf tensions fuel safe-haven flows. The yen weakened to the critical 160-per-dollar level briefly in early trades, hitting the level for the third straight session despite verbal warnings from authorities. Japan's Finance Minister Satsuki Katayama stated that Japan is ready to respond appropriately at any time on foreign exchange and reserves the right to take "decisive action" against excessive volatility. The yen is now set for its fourth straight week of decline, wiping out gains driven by intervention over the past month at a cost of $73 billion. Market analyst at IG, Tony Sycamore, noted that previous intervention efforts in late April delivered only a fleeting impact, and the dollar would need to sustainably weaken below 155 to inflict any meaningful damage on the prevailing uptrend. Japan's real wages climbed 1.9% in April from a year earlier, marking a fourth consecutive monthly gain. The Bank of Japan, which will next review its interest rates on June 15-16, considers steady rises in wages and prices as essential conditions for any further rate hike. The BOJ is expected to raise rates unless a sharp escalation in the Middle East conflict upends markets, as rising fuel costs from the energy shock add to mounting price pressure in the economy. U.S. President Donald Trump's efforts to halt fighting in the Middle East and forge peace with Tehran are facing fresh obstacles, after the Iran-backed Hezbollah militia rejected a new ceasefire in Lebanon on Thursday while Israel said it would not withdraw troops from the country. A flare-up in hostilities this week, including exchanges between Iranian and U.S. forces, has pushed Brent futures firmly above $90 for a weekly gain and supported the dollar on safe-haven flows. The euro stood at $1.1612, up 0.02% so far in Asia, and sterling was steady at $1.34228, both heading for small weekly losses. The risk-sensitive Australian dollar was down 0.1% at $0.71265, and the New Zealand dollar held flat at $0.5867 with a 2% weekly advance. The dollar index was little changed at 99.434, on track for a 0.5% gain for the week. Markets are keenly awaiting nonfarm payrolls, due for release later in the global day. A Reuters survey of economists predicted an 85,000 rise in jobs in May, slower than an increase of 115,000 in April. The unemployment rate is forecast unchanged at 4.3%.