US Dollar Rises as Trump Meets Leaders of China and Japan

The US dollar closed at 101.03 following a two-week rally driven by rising Treasury yields and hawkish signals from the Federal Reserve System. The central bank recently raised its policy rate to a range of 3.75–4.00%, with officials signaling further increases are likely. Market bets for an October rate hike rose to 66% following comments from officials regarding inflation concerns.

Donald Trump hosted a closed-door summit in Washington with Chinese President Xi Jinping, though the meeting failed to produce breakthroughs on trade, AI, Taiwan, or the conflict with Iran. In separate discussions with Japanese Prime Minister Sanae Takaichi, Trump expressed concern over the weakness of the Japanese yen. Following these talks, Japanese Finance Minister Satsuki Katayama announced that both nations reaffirmed their commitment to a joint intervention stance to stabilize the currency, triggering the yen's largest daily gain since September 7.

Financial markets saw mixed results as US Treasury yields stabilized after hitting multi-decade highs. Oil prices dropped approximately 8% on hopes that Iran might reopen the Strait of Hormuz if the US reduces military pressure and lifts its blockade. Despite this volatility, US stocks rose, supported by AI-related optimism and new Copilot app capabilities unveiled by Microsoft.