The US dollar rose on the 6th morning at 7:40 AM, with the dollar index (DXY) reaching 101.058, up 0.210 points (0.108%) from the closing price of 100.880 on the 2nd, according to Yonhap Infomax. The dollar's strength was driven by yen weakness, as the Japanese yen faced sustained depreciation pressure due to concerns over Japan's expansionary fiscal policy. The dollar-yen exchange rate surged to 162.313 yen, up 1.197 yen (0.737%) from the previous session, reflecting market anxiety over Japan's planned fiscal expansion outlined in the 'Honebuto' policy framework.
Dollar Index Rises 0.108% from 2nd Closing
According to Yonhap Infomax (screen number 6411), the dollar index reflecting the dollar's value against six major currencies stood at 101.058 as of 7:40 AM on the 6th (US Eastern Time) in the New York foreign exchange market. This represented an increase of 0.210 points (0.108%) from the closing price of 100.880 on the 2nd. The New York stock and bond markets were closed on the 3rd for US Independence Day. The dollar continued to face upward pressure amid yen weakness on this day.
![Dollar Index Intraday Movement [Source: Yonhap Infomax]]()
Dollar-Yen Surges to 162.313 on Japan Fiscal Policy Concerns
The dollar-yen exchange rate jumped to 162.313 yen, up 1.197 yen (0.737%) from the previous session. The dollar-yen pair retraced its sharp decline from the previous trading day amid vigilance over potential intervention by Japanese foreign exchange authorities. Japan's 'Honebuto' policy framework, which outlines the basic policy for economic and fiscal management and reform, is placing a burden on the Japanese foreign exchange market. The Honebuto policy plans additional fiscal spending of 10 trillion yen annually from fiscal year 2027 onward. The original draft of the policy included a statement that "appropriate monetary policy management with the Bank of Japan (BOJ) is very important," which is assessed as diluting expectations for BOJ interest rate hikes.
Goldman Sachs Projects Dollar-Yen at 165 in One Year
Goldman Sachs strategist Karen Reichgott Fishman presented a one-year dollar-yen exchange rate forecast of 165 yen, citing Japan's fiscal burden and the prolonged high level of US Treasury yields as the basis. Ben Bennett, Head of Asia Investment Strategy at L&G Asset Management, stated, "The overall direction of the exchange rate is determined by Japan's accommodative fiscal policy and the large interest rate gap with the US," adding that "(Japanese foreign exchange authorities') intervention will not change that direction."
Euro and Pound Decline Against Dollar
The euro-dollar exchange rate fell to 1.14145 dollars, down 0.00163 dollars (0.142%) from the previous session. The pound-dollar exchange rate declined to 1.33417 dollars, down 0.00039 dollars (0.029%). The market is predicting former Energy Secretary Ed Miliband as the next UK Chancellor of the Exchequer. David Stridge, a forex analyst at CaxtonFX, explained, "Miliband, a former energy secretary and Labour Party leader, is well known for favoring a much more expansionary budget policy than the Treasury would be comfortable accepting." The offshore dollar-yuan (CNH) exchange rate rose to 6.7975 yuan, up 0.0097 yuan (0.143%) from the previous session.
Upcoming ISM Services PMI and Fed Governor Waller Speech
Economic indicators scheduled for this day include the June services Purchasing Managers' Index (PMI) to be released by the Institute for Supply Management (ISM). There is also a speech by Federal Reserve Governor Christopher Waller, who has significant market influence. David Scott, a strategist at City Index, stated, "Just a few months ago, Christopher Waller argued that considering rate cuts was 'crazy,'" adding, "Whether he will give such a clear signal this time is exactly what traders should pay attention to." Regarding dollar movement, he explained, "We must respect what the price is telling us," noting that "the market is now showing that the next move is no longer a one-sided bet." West Texas Intermediate (WTI) crude oil for August delivery is trading around $68 per barrel, down 0.3% from the previous session, due to concerns over global oil supply surplus.
FAQ
What caused the dollar to rise on the 6th morning?
The dollar index rose to 101.058 on the 6th morning at 7:40 AM, up 0.210 points (0.108%) from the closing price of 100.880 on the 2nd, driven by yen weakness stemming from concerns over Japan's expansionary fiscal policy outlined in the 'Honebuto' framework.
How much did the dollar-yen exchange rate surge?
The dollar-yen exchange rate surged to 162.313 yen, up 1.197 yen (0.737%) from the previous session, as the yen faced depreciation pressure due to Japan's planned fiscal expansion of 10 trillion yen annually from fiscal year 2027 onward.
What is Goldman Sachs' dollar-yen forecast?
Goldman Sachs strategist Karen Reichgott Fishman projected the dollar-yen exchange rate at 165 yen in one year, citing Japan's fiscal burden and prolonged high US Treasury yields as the basis for the forecast.
