Dollar Hits Two-Week High as Warsh Fuels Rate-Hike Bets, Yen Breaks 160

The dollar rose to its highest level in two weeks after Kevin Warsh's remarks boosted bets that the Federal Reserve will raise interest rates. Higher rate expectations typically strengthen the dollar because they make dollar-denominated assets more attractive to yield-seeking investors. The yen bore the brunt of the move, slipping past 160 per dollar. U.S. Treasury Secretary Scott Bessent told Reuters that yen moves are "contained" and that Washington will not pressure the Bank of Japan on interest rates, a signal that Washington sees no need for coordinated intervention despite the currency's weakness. Gold, which had suffered a sharp selloff tied to the same rate-hike repricing, steadied in the aftermath. What is unresolved is whether Warsh's comments translate into an actual Fed decision, or whether they turn out to be rhetoric that markets later unwind. The yen's move past 160 also raises the question of how much further weakness Tokyo will tolerate before intervening, despite Bessent's comments.