Dollar Hits Seven-Month Low Amid Escalating Middle East Tensions
The US dollar traded near a seven-month low against the yen on Wednesday as oil prices rose above $100 a barrel amid escalating tensions in the Middle East. Investors are positioning for central bank meetings next week, which is putting pressure on the dollar.
The dollar's weakness is largely due to the yen's sharp gains over the past week and shifting expectations ahead of policy decisions from the Federal Reserve and Bank of Japan. The US currency has trimmed losses against major peers after the US Treasury Department announced it would triple the size of its long-dated buyback operation on Thursday.
The yen's strength is being driven by expectations of faster Bank of Japan policy tightening, repatriation flows from Japanese investors, and pressure from Washington for a stronger yen. Markets expect the BOJ to raise interest rates by 25 basis points at its September 17-18 meeting, though further yen gains may depend on whether Governor Kazuo Ueda reinforces hawkish policy signals.