The Japanese yen rose in Asian trading on Thursday against a basket of currencies, attempting to recover from a six-week low against the US dollar and heading toward its first gain in three days, supported by buying activity at lower levels.

The move comes amid growing expectations that the Bank of Japan could take steps to support the local currency, particularly as the yen continues to trade within the intervention zone closely monitored by Japanese monetary authorities.

The US dollar weakened, while oil prices surrendered their gains after a new round of US strikes on Iran concluded and tensions in the Strait of Hormuz eased. Markets are now watching for further developments in the ongoing peace negotiations between Washington and Tehran.

The Price

• Japanese yen exchange rate today: The dollar fell about 0.1% against the yen to ¥160.42, from an opening level of ¥160.54, after touching an intraday high of ¥160.56.

• The yen ended Wednesday down more than 0.1% against the dollar, marking its second consecutive daily loss and hitting a six-week low of ¥160.57.

The 160-yen threshold

Japanese authorities are closely monitoring movements in the currency market, particularly after the yen weakened beyond the key ¥160-per-dollar threshold, a level widely viewed as one that could trigger renewed intervention.

Sources told Reuters that Tokyo intervened several times in late April and early May to halt the yen’s decline. At that time, the currency had fallen to ¥160.72 per dollar, its weakest level since July 2024.

Japanese officials have warned against excessive currency volatility and indicated that authorities could take decisive action against disorderly movements in the foreign exchange market.

Finance Minister Satsuki Katayama said the government is "prepared to take appropriate action" if currency markets experience excessive or speculative moves.

Japanese interest rates

• Data released on Wednesday showed Japan’s producer prices accelerating to their highest level in three years as energy costs surged due to the Iran conflict.

• Following the data, market pricing for a quarter-point interest rate hike by the Bank of Japan at its June meeting increased from 75% to 95%.

• Investors are now awaiting additional data on inflation, unemployment, and wage growth in Japan to reassess those expectations.

• The Bank of Japan will meet on June 15-16 to evaluate the appropriate monetary policy tools for the world’s fourth-largest economy.

US dollar

The US Dollar Index fell more than 0.1% on Thursday, resuming losses that were temporarily paused on Wednesday and moving further away from two-month highs, reflecting weakness in the US currency against a basket of major and minor peers.

The decline followed the conclusion of a new round of US strikes on Iran, which are being viewed as part of a pressure strategy aimed at encouraging Iranian authorities to make greater progress in ongoing peace negotiations, potentially paving the way for a final agreement that could reduce tensions and improve stability across the Middle East.

Global oil prices

Global oil prices gave up most of their early gains on Thursday after the United States denied reports that the Strait of Hormuz had been closed to shipping traffic, helping to ease concerns about disruptions to global energy supplies.

Developments in the Iran conflict

• The United States launched new airstrikes on Iran for a second consecutive day.

• Prior to the attack, President Donald Trump said the United States would carry out a "very strong" strike against Iran.

• US Defense Secretary Pete Hegseth said Washington would target "vital facilities."

• The attacks represent one of the most serious escalations since the April ceasefire.

• Iran’s Revolutionary Guard said US military bases in Kuwait and Bahrain were targeted with drones and missiles.

• Tehran announced the complete closure of the Strait of Hormuz due to security concerns, while Washington denied that the strait had been closed.

The Canadian dollar rose modestly against its US counterpart on Wednesday after the Bank of Canada maintained a wait-and-see approach on interest rates, while investors continued to assess the future of the North American free trade agreement amid ongoing uncertainty.

The Canadian dollar, commonly known as the loonie, gained about 0.2% to C$1.3925 per US dollar after trading in a range between C$1.3900 and C$1.3957 during the session. It had touched a six-month low of C$1.3969 on Tuesday.

The Bank of Canada left its benchmark interest rate unchanged at 2.25% for a fifth consecutive meeting, citing limited evidence that higher energy prices are feeding into broader inflation across the economy.

Swap market data showed investors now expect only around 32 basis points of rate increases by December, down from 37 basis points before the central bank's decision.

Darcy Briggs, portfolio manager at Franklin Templeton Canada, said Canadian economic data "is not strong," giving the central bank room to remain on hold and monitor developments.

First-quarter GDP data had previously shown the Canadian economy slipping into a technical recession.

Briggs noted that Canada is facing three major pressures: higher energy prices, the repricing of a large number of mortgages at higher interest rates, and ongoing trade uncertainty.

In the same context, Donald Trump said on Wednesday that he may not renew the free trade agreement between the United States, Canada, and Mexico.

Global oil prices — one of Canada's key exports — also climbed about 2.5% to $93.78 per barrel following exchanges of strikes between the United States and Iran.

In the bond market, Canadian government bond yields were mixed, while the benchmark 10-year yield was little changed at 3.487%.

Iraq, OPEC’s second-largest oil producer, has less than two months before it risks losing its main crude oil export route, as the agreement governing oil shipments through pipelines to Turkey is set to expire on July 27.

The pipelines have become a vital lifeline for Iraq’s ability to market its crude since the effective closure of the Strait of Hormuz on February 28. Until then, around 95% of Iraq’s oil exports passed through the strait to key Asian markets, led by China.

The closure of Hormuz quickly filled Iraq’s storage facilities to capacity, and with limited alternatives available for transporting crude, Baghdad was forced to shut down a number of producing wells.

Experts warn that prolonged production shutdowns could cause permanent damage to Iraqi oil fields due to reservoir pressure loss, water intrusion, corrosion, and other technical issues.

Baghdad faces a July 27 deadline before losing its primary oil lifeline

The situation is particularly dangerous for Iraq because more than 90% of the state budget has historically depended on oil revenues.

The roots of the current crisis date back to a March 2023 ruling by an international arbitration court ordering Turkey to pay Baghdad $1.5 billion for violating the 1973 crude oil pipeline agreement after Ankara allowed the Kurdistan Regional Government to export oil independently of Iraq’s federal government.

Following the ruling, Turkey activated a clause in July 2025 requiring a one-year notice period to terminate the 52-year-old agreement, with the cancellation set to take effect on July 27, 2026.

Production falls to its lowest level since the 2003 invasion of Iraq

Following the closure of the Strait of Hormuz, Iraq’s oil production fell in April to an average of 1.389 million barrels per day, compared with roughly 3.47 million barrels per day between January 2002 and the end of March this year, and more than 4.1 million barrels per day during the three months preceding February 28.

This marks the lowest level of Iraqi oil production since the US-led invasion of Iraq in 2003.

In an effort to preserve exports, Baghdad has turned to alternative transportation methods, most notably trucking. Around 500 trucks are now being used daily, each carrying between 200 and 250 barrels of crude oil.

However, these volumes remain far from sufficient to meet the needs of the Iraqi economy, prompting the government to accelerate efforts to rehabilitate the old pipeline linking Kirkuk to Turkey’s Mediterranean port of Ceyhan.

The original Kirkuk-Ceyhan system consists of two pipelines with a combined nameplate capacity of 1.6 million barrels per day. Actual operating capacity, however, has ranged between 250,000 and 400,000 barrels per day due to repeated attacks over the years.

Baghdad is currently developing the Kirkuk-Nineveh section as part of a broader effort to restore the federal pipeline network to Ceyhan, independent of the Kurdistan Regional Government’s control.

The Iraqi Oil Ministry is pursuing a phased restart strategy. In the first stage, it aims to transport between 150,000 and 250,000 barrels per day of Kirkuk crude next month before gradually increasing throughput.

Meanwhile, the Kurdistan Region operates its own pipeline system extending from the Taq Taq field through Khurmala to Fishkhabour, where it connects to the Kirkuk-Ceyhan pipeline. The line has a design capacity of up to one million barrels per day, although peak actual throughput has so far reached around 900,000 barrels per day.

The core problem, however, is that both pipeline systems are governed by the same 1973 agreement with Turkey, meaning both could cease operations on July 27 unless a new arrangement is reached with Ankara.

According to sources in Iraq’s energy sector, Turkey is leveraging its strong negotiating position to seek broad concessions, including joint projects in oil, gas, petrochemicals, and electricity, in addition to compensation related to the $1.5 billion arbitration award.

Ankara is also seeking higher transit fees for Iraqi crude shipments and wants Baghdad to commit to large, stable daily export volumes, with penalties for non-compliance.

In the background, the interests of major global powers are increasingly intertwined. The Kurdistan Region enjoys Western support, while Iraq’s federal government has moved closer to both Russia and China.

Part of the negotiations is tied to the $17 billion Development Road project, which aims to connect Iraq to Turkey and Europe in the west while linking to China’s Belt and Road Initiative in the east.

The project envisions an integrated transport corridor stretching from the Grand Faw Port in Basra, passing through Iraq’s most important oil and gas fields, reaching Fishkhabour on the Turkish border, and then extending through road and rail networks toward Europe.

Major Wall Street indexes declined on Wednesday as technology shares extended their losses, while renewed tensions between the United States and Iran overshadowed the impact of US inflation data that largely matched market expectations.

By 9:37 a.m. New York time, the Dow Jones Industrial Average had fallen 285.36 points, or 0.56%, to 50,586.75. The S&P 500 dropped 33.44 points, or 0.45%, to 7,353.21, while the Nasdaq Composite lost 147.78 points, or 0.57%, to 25,531.04.

Financial markets have experienced increased volatility in recent days as investors navigate a growing list of risks, including elevated technology stock valuations, escalating geopolitical tensions in the Middle East, and expectations that the Federal Reserve may be forced to raise interest rates to contain inflation.

The CBOE Volatility Index (VIX), often referred to as Wall Street’s fear gauge, rose 0.78 points to 20.65 after reaching its highest level since April 7 in the previous session.

Inflation and rate concerns weigh on AI and technology stocks

Economic data showed that US consumer prices rose 4.2% over the twelve months through May, marking the largest annual increase since April 2023. The rise was driven largely by higher gasoline and energy prices linked to the Middle East conflict.

However, the figures were broadly in line with economists’ expectations.

Art Hogan, Chief Market Strategist at B. Riley Wealth, said the inflation report matched forecasts but continued to move in a direction that remains uncomfortable for both investors and policymakers.

He added that the report did not materially alter expectations for the upcoming Federal Reserve meeting, with consensus still pointing to no change in interest rates for now.

Markets widely expect the Fed to keep rates unchanged at its June meeting, although investors continue to price in at least one 25-basis-point rate increase before year-end.

Heavy losses for semiconductor and AI stocks

Technology and artificial intelligence stocks remained the hardest hit as investors adjusted to the possibility of tighter monetary policy and growing concerns about stretched valuations across the sector.

Shares of Nvidia, Broadcom, and Micron Technology fell between 1% and 3.8%, resuming their decline after a brief rebound on Monday.

The S&P 500 technology sector also slipped 1.1%.

Super Micro Computer plunged 14.2% after announcing plans to raise $7 billion through equity offerings and related financing transactions to fund component purchases needed to meet growing demand for AI servers.

Meanwhile, profit-taking in high-performing technology names helped support sectors that have lagged the market this year, including healthcare, real estate, and consumer staples.

Six of the eleven major S&P 500 sectors traded higher, with the energy sector leading gains as oil prices climbed more than 1%.

US President Donald Trump said Iran had taken too long to negotiate an agreement and would now “pay the price,” while Tehran announced it would reassess its diplomatic approach toward Washington following overnight military exchanges.

Investors also view the highly anticipated IPO of SpaceX on Friday—targeting a valuation of $1.75 trillion and seeking to raise $75 billion—as a potential source of additional pressure on US equities amid growing concerns about excessive optimism in the technology sector.

In other stock movements, trucking companies including XPO, J.B. Hunt, and Old Dominion fell between 2.5% and 6.2% after Amazon announced an expansion of its less-than-truckload shipping services across the United States.

As a result, the industrial sector declined 1%.

Market breadth was negative overall, with declining stocks outnumbering advancing issues by 1.17-to-1 on the New York Stock Exchange and by 1.05-to-1 on the Nasdaq.

Within the S&P 500, 13 stocks reached new 52-week highs while four hit new lows. On the Nasdaq, 35 stocks posted new highs and 71 registered new lows.