Dollar Dips as Oil Eases, Yen Jumps on Japan Intervention Concerns

The US dollar dipped on Friday as oil prices eased more than 2%, breaking a four-day streak of gains. The global crude market has been volatile due to concerns about supply disruptions and potential truces between major players.

Despite the decline, the dollar remains poised for a second straight weekly advance, driven by growing expectations for rate hikes from the Federal Reserve. Market bets now stand at around 66% for a rate increase at the October meeting, up from 58% last week.

Eugene Epstein, head of trading and structured products at Moneycorp in Stamford, Connecticut, noted that the dollar's rally may be 'a little stretched' but doesn't see it as weakening materially. He attributed the dollar's strength to a combination of factors, including increased odds of another rate hike before year-end and rising bond yields.

The yen jumped 1.06% after Japan's Finance Minister Satsuki Katayama confirmed that US President Donald Trump expressed concern about yen weakness during a summit with Japanese Prime Minister Sanae Takaichi earlier this week. This reaffirmed the two nations' intention to strengthen cooperation on yen undervaluation.