Gold Rises, Dollar Drops on Yen Intervention Risk – Asia Market Wrap

The Dollar declined versus the majority of its major peers as fears of the US intervening in Japan’s foreign exchange market weighed on sentiment towards the world reserve currency. Gold surged beyond $5,000 for the first time on haven demand.

Asian currencies gained from the weak Dollar, with the Malaysian  surging to its best level since 2018, and the South Korean Won reaching its highest level in around three weeks. Singapore’s currency surged to its highest level since 2014.

The instability in foreign exchange markets comes as Japan’s senior currency head, Atsushi Mimura, says authorities in Tokyo would work closely with their counterparts in Washington. Earlier, Japan’s PM Takaichi cautioned markets that the government is prepared to respond.

Traders saw the New York Fed’s moves as an indication that the central bank was ready to assist Japanese policymakers in intervening directly in the currency market to support the Yen. Last week, the Dollar plummeted to its lowest level since May amid unclear US policies, tariff tensions between the US and Europe, and attacks on the Fed’s independence.

Treasuries climbed up despite trade fears and escalating global tensions. Japan, South Korea, and Hong Kong’s equity indices all declined.