USD/JPY picks up above 159.00 amid a broad-based US Dollar recovery.
The standoff about the Strait of Hormuz casts doubt on the US-Iran peace talks.
Japanese Finance Minister Satsuki Takayama launched a subtle intervention warning on Wednesday.
The US Dollar (USD) has retraced previous losses against the Japanese Yen (JPY) on Thursday, returning to levels right above 159.00 at the time of writing, as the US-Iran rift over the Strait of Hormuz dampens optimism about the peace process.
The Greenback is trimming losses against its main peers in Thursday’s European session. Traders maintain a moderate risk appetite, but threats by Iranian authorities to shut traffic in the Red Sea and the Gulf of Oman if the US blockade of Iranian ports continues have dampened earlier optimism.
Previously, markets had welcomed US President Trump’s comments confirming negotiations with Iran, which, he said, are likely to lead to a new round of talks in the coming days. Apart from that, Israel’s cabinet security member, Galia Gamliel, said earlier on Thursday that Prime Minister Benjamin Netanyahu will meet Lebanese President Joseph Aoun, which might pave the way for a resolution of the Middle East conflict.
In Japan, Finance Minister Satsuki Takayama affirmed that her country and the US have agreed to strengthen communication on exchange rates, following a meeting with US Treasury Secretary Scott Bessent. These comments are a clear warning of Tokyo’s commitment to stem excessive JPY weakness, but the impact on the market has been marginal.
Moving away from geopolitics, the US macroeconomic docket provides some distraction on Thursday. The Philadelphia Fed Manufacturing Survey from April, Industrial Production data from March, and the speeches of the New York Fed President John Williams and Board member Stephen Miran are likely to attract some attention later in the day.
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