To The Moon

The US dollar advanced for the second consecutive trading day this week, posting its largest single-day gain since May 19th. The Japanese yen breached the critical 160 level against the dollar, following comments from Bank of Japan Governor Kazuo Ueda, who suggested a potential rate hike this month, though his remarks lacked the definitive tone preceding the previous two increases.

The Bloomberg Dollar Spot Index edged up by 0.3%, while the yield on the 10-year US Treasury note climbed 4 basis points, partly driven by rising oil prices in the wake of heightened US-Iran tensions.

Brent crude oil briefly approached $99 per barrel before paring gains, as market optimism for a peaceful resolution between the US and Iran waned.

Separately, the United States announced plans to impose new tariffs of at least 10% on imports from 60 trading partners.

All other G10 currencies weakened against the greenback on Wednesday, with the New Zealand dollar and Swedish krona among the worst performers.

The USD/JPY pair climbed as high as 160.08 during New York trading, reaching its strongest level since April 30th, when Japanese authorities intervened in the currency market.

Overnight index swaps indicate that markets are pricing in approximately an 86% probability of a Bank of Japan rate hike this month.

Japanese Finance Minister Shunichi Suzuki reiterated that authorities stand ready to respond to currency market movements as needed.

Many traders are focused on over $8 billion worth of USD/JPY options, concentrated around the 159-160 level, which are set to expire throughout Thursday.

The AUD/USD pair fell as much as 0.7% to 0.7129.

Australia's economy grew by a seasonally adjusted 0.3% in the first quarter, a slowdown that exceeded expectations. The deceleration was attributed to rising fuel costs and the initial impact of higher interest rates, which offset a surge in data center investment.

The EUR/USD pair declined by 0.3% to 1.1598.