US FX WRAP: Dollar little changed to end the week; JPY gains after Katayama comments

USD was little changed to end the week with mixed signals out of the Middle-East, ultimately leaving US yields higher W/W. Data was absent, meaning the focus was on geopolitics, in which US President Trump reaffirmed that Iran has requested talks, which will continue, but sounded more affirmative that the ceasefire is over. Overall, US yields move higher on Friday despite the move lower in crude prices, limiting USD downside amid the risk-on sentiment. DXY hit intraday lows of 100.60 before paring to 100.960.

JPY outperformance came amid remarks from Finance Minister Katayama. She noted that they are to pursue steps to promote investment in Japanese assets by GPIF and others. Bart Wakabayashi, Tokyo branch manager at State Street Bank & Trust said that this story could really change the narrative, though it’s a six or 12 months down the road type of thing. "The sustainability of further yen buying would need to be backed by further commitment". Additionally, reports noted that the BoJ is reportedly to keep rates unchanged in July but maintain policy guidance and also raise growth outlook. USD/JPY set a trough of 161.28 before bouncing to 161.69.

CAD was slightly firmer than the buck to finish the week. Today's jobs report had a limited reaction on USD/CAD. Employment growth was better than expected at 18.2k (exp.10k) due to private sector growth being at 56k, leaving the unemployment rate lower at 6.5% from 6.6%. Following the data, Oxford Economics believes excess slack in the labour market will help keep the BoC on hold until late 2027.