On Friday, the U.S. dollar index retreated from near a 13‑month peak, falling X.XX% to a level of XXX.XX and positioning the greenback for a 0.8% weekly decline. The pull‑back followed softer‑than‑expected U.S. employment data, which cooled expectations for additional Federal Reserve rate hikes. A U.S. market holiday limited trading volumes, keeping broader moves muted. In parallel, diplomatic headlines from Qatar – where technical U.S.–Iran peace talks reported “positive progress” before pausing for the funeral of late Iranian Supreme Leader Ayatollah Ali Khamenei – added a note of caution to risk‑sensitive markets.
The weaker dollar opened space for gains in other major currencies. The euro rose 0.5% over the week, while the British pound edged up 0.1% in European trade. The Australian dollar, viewed as a barometer of regional risk appetite, appreciated nearly 0.3% against the U.S. dollar. The Japanese yen steadied around 161.14 per dollar after a sharp overnight fall, with authorities signalling a more targeted intervention campaign to curb speculative pressure.
Prior to the payroll release, the CME FedWatch tool assigned a little over 60% probability to a September rate hike by the Federal Reserve. Following the data, those odds were revised down, with market expectations now pointing to a hold in October. Fed Chair Kevin Warsh reiterated this week that the central bank remains strictly independent and committed to a 2% inflation target despite persistent price pressures.
Japanese officials have warned of possible foreign‑exchange intervention and have shifted from broadly telegraphed actions to a more focused approach aimed at squeezing speculators. The government could intervene again on Friday, although analysts at OCBC noted that verbal or actual intervention alone is unlikely to produce a sustained reversal in USD/JPY without a change in underlying macro fundamentals.