Dollar Eases as Yen Snaps a Losing Streak; Sterling Steadies at 1.32

The Dollar Index sits at 100.75, down 0.21%, in a session still running — the reading comes roughly three hours before New York's 17:00 close. The pullback is being driven less by the euro or sterling, which are barely moved, than by USD/JPY's outsized -1.01% drop to 157.25, the largest FX move on the board today. That's notable because it's happening even as US Treasury yields rose across the day (10-year up 3.4bp, 30-year up 5.0bp) — a combination that would normally support the dollar against the yen. Instead, yen strength is reinforcing the index's soft tone rather than standing apart from it.

US yields rose modestly across most of the curve: the 10-year added 3.4bp to 5.196%, the 30-year 5.0bp to 5.511%, while the 5-year (+0.2bp to 5.027%) and 3-month (+0.4bp to 4.072%) barely moved. The backdrop remains the Fed's 25bp hike to 3.75%-4.00% on September 16, delivered with hawkish guidance from Fed Chair Kevin Warsh. The live policy question this cycle is whether the Fed hikes again rather than whether it cuts, with markets pricing the probability of a further move — a stance consistent with the day's firmer long-end yields.

EUR/USD is little changed at 1.1391 (+0.10%), still pinned near its weakest level in almost two months and down roughly 2.2% over the trailing month, even after eurozone composite PMI rose to a more-than-three-year high of 53.1. GBP/USD trades at 1.3242 (+0.18%), stabilizing after Thursday's three-month low near $1.32. USD/JPY is the day's standout, down 1.01% to 157.25 and breaking clean below the prior session's range. USD/CAD sits at 1.4153 (+0.11%), extending a five-session advance as oil slides and Fed-BoC policy divergence widens.

Sterling fell to a three-month low near $1.32 on Thursday, before stabilizing around 1.3200 in Asian trading Friday; it now sits at 1.3242 (+0.18%). The weakness is a multi-day trend rather than a single-session move, extending a run of declines that ran through the prior week's sessions. The BoE held Bank Rate at 3.75% on September 17 by a 6-3 vote; dissenters Catherine Mann, Megan Greene and Huw Pill wanted an immediate rise to 4.00%. Deputy Governor Clare Lombardelli said rates may need to rise further unless the economy shows clear weakness, while MPC member Swati Dhingra stayed dovish. Markets price around a 67% chance of a November BoE hike, per LSEG, offering only partial offset to dollar strength. BoE Deputy Governor Dave Ramsden speaks on quantitative tightening Monday.

New Zealand's Daylight Saving Time shift is scheduled for just after midnight Sydney time tomorrow (low-impact, no forecast given). Looking ahead: ECB President Christine Lagarde and Frank Elderson are due to speak Monday, alongside BoE Deputy Governor Dave Ramsden's 11:00-12:00 UK time remarks on quantitative tightening. Tuesday brings the European Commission's business and consumer sentiment survey, Statistics Canada's July GDP by industry with an August advance estimate, US JOLTS job openings for August (10:00 ET), and a Bank of Canada fireside chat from Deputy Governor Toni Gravelle, embargoed until 13:20 ET. The ONS Quarterly National Accounts bulletin follows September 30, ahead of the next BoE rate decision on November 5.