Dollar Pressured as Coordinated Yen Intervention Shakes Currency Markets

Summary

The dollar came under pressure after Japan and the US confirmed a rare coordinated intervention to support the yen, fuelling expectations that the Bank of Japan may raise interest rates sooner. The FTSE 100 is set to open after mixed global trading, while Wall Street finished last week with modest losses following weaker-than-expected US jobs data. Oil prices eased after President Donald Trump said US-Iran talks would take place later today, raising hopes of reduced Middle East tensions.

Equities

The FTSE 100 closed 0.3% lower on Friday at 10,868.05 after retreating from record highs, but still recorded its strongest monthly gain since February and extended its weekly advance. The FTSE 250 slipped 0.4% on the day while securing a third consecutive week of gains.

NatWest closed 3.2% higher on Friday after reporting first-half operating profit before tax of £4.3 billion, ahead of expectations, and raising its outlook for the rest of 2026. Sainsbury's added 1% after agreeing to sell Argos for at least £120 million, completing its exit from the general retail business. British Airways owner IAG fell 1.5% after trimming its capacity outlook for 2026 to flat, while IG Group also lost 1.5% after agreeing to acquire US prediction markets operator Underdog in a deal worth up to $1.3 billion. Greggs dropped 7.5% after RBC downgraded the shares from "outperform" to "sector perform".

On Wall Street, the S&P 500 closed 0.70% higher on Friday, the Nasdaq gained 1% and the Dow Jones Industrial Average rose 0.53%. The S&P 500 finished the week up 1.05%, while the Nasdaq advanced 1.59%, as investors responded positively to another round of technology earnings.

Amazon surged more than 15% after reporting its strongest quarterly revenue growth in more than four years, reassuring investors that its investment in artificial intelligence infrastructure is delivering results. Microsoft climbed 3%, extending Thursday's sharp gains after forecasting stronger cloud growth, while Monolithic Power Systems rose more than 8% after issuing an upbeat third-quarter revenue forecast.

Apple fell 7.4% after warning that supply constraints would weigh on growth, overshadowing gains elsewhere in the technology sector. GoDaddy dropped almost 17% after narrowing its annual revenue forecast, making it one of the weakest performers of the session. Analysts now expect aggregate second-quarter earnings for S&P 500 companies to rise 48%.

Forex & Commodities

The US dollar weakened early on Monday after Japanese authorities intervened to support the yen, while the Japanese currency extended last week's rally. The yen traded at 156.5 per US dollar after earlier strengthening to 155.2, its strongest level in around three months, while the euro rose to 1.156 against the US dollar. Sterling also gained ground, trading near $1.347 early this morning. Japan confirmed it had carried out coordinated foreign exchange intervention with the US on Friday, with Bank of Japan data indicating Tokyo may have purchased up to $58.97 billion of yen on Thursday.

Spot gold rose to $4,069 per ounce early on Monday as the weaker US dollar made the precious metal more attractive to international buyers. However, gains remained restrained as investors awaited developments in planned US-Iran talks and this week's US economic data. Silver traded at $58.46 per ounce, platinum reached $1,651 and palladium climbed to $1,294.

Oil prices fell sharply early on Monday after US President Donald Trump said he had cancelled a planned attack on Iran to allow negotiations over Tehran's nuclear programme. Brent crude dropped to $83.44 a barrel and US West Texas Intermediate fell to $79.77. OPEC+ also confirmed on Sunday that it will increase production quotas by around 188,000 barrels per day from September, completing the reversal of its voluntary output cuts, although ongoing supply disruptions have so far limited the impact on global markets.