Asian Intervention Puts US Dollar Under Pressure

The US dollar is facing significant pressure due to coordinated intervention from Asian foreign exchange authorities. The Australian and New Zealand dollars have broken out to fresh highs, fueled by broad-based US dollar weakness.

The suspected intervention by Japanese authorities, possibly in coordination with South Korean authorities and with tacit support from the United States, has maximized its impact given the US Fed's decision against raising rates on Wednesday.

US economic data broadly disappointed on Thursday, contributing to the dollar's weakness. Core PCE inflation rose 0.1% in June, below expectations, while annual growth eased from 3.4% to 3.3%. The Bank of Japan meeting later this session may influence AUD/USD and NZD/USD more than economic data.

The intervention has raised the stakes for the BOJ's decision. US Treasury Secretary Scott Bessent wants the Bank of Japan to normalize policy, but if Japanese authorities are already working with South Korean and US counterparts, a surprise rate hike may be on the cards.