Dollar Soars on Oil Price Hike, Yen Tumbles to New Lows

The dollar is poised for its biggest weekly gain since mid-June due to rising oil prices and growing concerns about inflation, while the yen is set for its largest weekly percentage decline in over two months.

Japan's Finance Minister Satsuki Katayama reiterated the government's readiness to take action in the foreign exchange market, but verbal efforts to support the yen have had muted results. Some analysts believe another intervention by Japanese officials would only have a short-term effect without coordinated steps such as more aggressive rate hikes from the Bank of Japan.

The U.S. Treasury Department joined calls for rate hikes from the BOJ, warning that excessive currency volatility is undesirable. Markets have priced out any chance of a rate hike from the BOJ at its upcoming policy meeting next week, according to LSEG data.

Thierry Wizman, global FX & rates strategist at Macquarie Group in New York, said 'it's not surprising that dollar-yen has gone up under the conditions that we're facing.' Oil prices have increased due to the ongoing conflict, causing a terms-of-trade shock for Japan and other countries.