Global markets entered Tuesday with the yen intervention still shaping currency positions, oil falling on renewed US-Iran deal hopes, and new labor data showing only a gradual cooling in US demand for workers.
Price action has been headline-driven, without a broad flight from risk. US equities advanced on Tuesday as oil prices eased, while the yen remained stronger than it was before last week’s intervention but gave back part of its initial surge. Investors are also looking toward the July US employment report due Friday, August 7.
Yen intervention changes the risk around USD/JPY
US and Japanese officials confirmed that both countries intervened in the foreign-exchange market after the dollar climbed above 163 yen. The dollar then fell below 160 and briefly approached 155.20 yen after the action was confirmed.
For traders who had treated yen weakness as a largely one-way position, the operation raises the cost of pushing USD/JPY rapidly higher. The Federal Reserve Bank of New York says it can execute foreign-exchange transactions for the US Treasury and Federal Reserve when authorities seek to counter disorderly market conditions. A 2025 US-Japan finance ministers’ statement also said intervention should be reserved for excessive volatility and disorderly exchange-rate moves.
Intervention has not erased the economic forces that pushed the yen lower. The interest-rate gap between the United States and Japan continues to favor the dollar, and higher imported energy costs increase pressure on Japan when the yen is weak. That helps explain why the dollar recovered from its post-intervention low instead of continuing to fall without resistance.
The precise size of the latest operation has not yet been confirmed in the regular Japanese disclosure. Japan’s most recent monthly report covered June 29 through July 29 and recorded no intervention during that period. The coordinated action occurred after that reporting window, so any estimate of its cost remains provisional until a later official release.
Oil falls on deal hopes, but Hormuz risk remains
Oil prices have become the quickest market gauge of changing expectations around the US-Iran conflict and the Strait of Hormuz. Brent crude fell 4.2% to $80.29 a barrel in early US trading Tuesday as hopes for an agreement improved.
The decline followed comments from US Treasury Secretary Scott Bessent that an agreement could be reached by Wednesday. Yet a ship was struck in the Strait of Hormuz and negotiators were still disputing fees.
Oil is responding to each negotiating headline because physical shipping risks remain unresolved. The US Maritime Administration says Iran continues to threaten and strike commercial vessels in the Persian Gulf, Strait of Hormuz and Gulf of Oman, and that the risk to commercial shipping remains high.
Lower oil reduces immediate inflation pressure and can support equities and government bonds. A renewed disruption to tanker traffic would reverse that effect quickly, lifting energy prices, inflation expectations and pressure on interest rates.
JOLTS points to gradual labor-market cooling
The June Job Openings and Labor Turnover Survey was released shortly before this article was prepared. US employers reported 7.36 million vacancies, down from 7.54 million in May and broadly in line with economists’ expectations. Layoffs were little changed at 1.8 million, while the number of workers quitting rose slightly.
Job openings have eased, but layoffs remain contained and the quits rate did not signal a sudden loss of worker confidence. For the Federal Reserve, gradual cooling is different from an abrupt employment contraction. A controlled slowdown could reduce wage and inflation pressure without forcing an immediate policy response. A sharp deterioration in payroll growth would increase concern that restrictive interest rates and the energy shock are reaching the broader economy.
The next labor-market test is the July employment report. The Bureau of Labor Statistics calendar schedules the release for Friday, August 7, at 8:30 a.m. Eastern. A FactSet survey cited by AP expects employers to have added about 100,000 jobs, up from 57,000 in June, with the unemployment rate holding at 4.2%.
