DXY Eases to 98.86 as Yen Rally Overshadows Dollar's Session

The Dollar Index sits at 98.8560, down 0.25% intraday — that's the change from Monday's New York close to the current live price, with today's session still open (it's roughly 14:00 in New York, about three hours before the 17:00 close). The softness is uneven: the dollar is down sharply against the yen (USD/JPY -1.20%) and more modestly against the Canadian dollar (USD/CAD -0.17%), euro (+0.10%) and sterling (+0.19%). That's despite firmer Treasury yields across most of the curve — the 5-year up 4.1bp to 4.550%, the 10-year up 2.2bp to 4.784% — suggesting the yen's own rally, not a broad dollar shift, is driving most of today's index move. Equities were little changed (S&P 500 -0.05%), while the VIX rose 5.30% to 15.30.

Treasury yields ticked higher across the curve: the 5-year led with a 4.1bp rise to 4.550%, the 10-year added 2.2bp to 4.784%, the 3-month rose 1.7bp to 3.757%, and the 30-year was little changed, up 0.3bp to 5.246%. The Fed funds target remains 3.50-3.75%, and one headline today reads, "US Jobs Rebound keeps a September Fed Hike live" — the live policy debate here is whether the Fed hikes, not cuts. The Fed has been in its blackout period since September 5 ahead of the September 15-16 FOMC meeting, so no officials are speaking. Fed Governor Christopher Waller had said on September 3 he'd be inclined to hold rates steady this month if August inflation data keep cooling.

EUR/USD: 1.1626 (+0.10%), holding its recent range with no major eurozone data due today; focus is on Thursday's ECB Governing Council decision. GBP/USD: 1.3542 (+0.19%), stabilizing off its recent two-week low; Monday's speech from Chancellor of the Exchequer John Healey drew little market reaction, and the UK's Monetary Policy Report Hearings follow at 23:15. USD/JPY: 154.35 (-1.20%), extending Monday's sharp yen rally to as strong as 154.06 on mounting bets the BoJ hikes at its September 17-18 meeting. USD/CAD: 1.3813 (-0.17%), with the loonie supported by crude oil's gain (WTI +1.62% to $92.71) even as Canada's new counter-tariffs on US goods took effect today.

USD/CAD trades at 1.3813, down 0.17% intraday, with the session still open. Monday's holiday-thinned trading (a Labour Day/Labor Day holiday in both Canada and the US) saw the pair consolidate just below the mid-1.3800s. Oil strength is the main support for the loonie today: WTI is up 1.62% to $92.71 and Brent sits at $96.28, with desk notes pointing to Mideast supply risk around the Strait of Hormuz. That's offsetting a weaker Canadian jobs backdrop — August employment fell 42,000 against a stronger US nonfarm payrolls print of +162,000 the same day — and the Bank of Canada's September 2 hold at 2.25%, which flagged upside inflation risks from energy prices and the US-Canada tariff dispute. Canada's new 15-50% counter-tariffs on roughly C$27.6bn of US goods took effect at 12:01am today, adding a fresh escalation. No major Canadian data is scheduled today.

Japan's Economy Watchers Sentiment is due at 15:00 (forecast 46.3, previous 45.7), followed by German Trade Balance at 16:00 (forecast 16.5B, previous 15.4B) and French Trade Balance at 16:45 (forecast -6.0B, previous -5.8B). RBA Deputy Governor Hauser speaks at 19:30, and the US NFIB Small Business Index lands at 20:00 (forecast 99.2, previous 99.8). The UK's Monetary Policy Report Hearings run at 23:15. The Fed remains in its blackout period ahead of the September 15-16 FOMC meeting, so no US officials are scheduled to speak. Looking further out, the ECB's rate decision is due Thursday, September 10, and the BoJ meets September 17-18.