U.S.-Iran Military Conflict Paused as Japan and U.S. Move Toward Joint Yen Intervention

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Summary:

Trump says he has agreed to call off strikes against Iran; Japan's finance minister is set to announce joint U.S.-Japan intervention in the foreign-exchange market to support the yen...

【Highlights】

1. Trump says he has agreed to call off strikes against Iran

2. Japan's finance minister to announce joint U.S.-Japan FX intervention to support the yen

3. Iran says reports of a plan to reopen the Strait of Hormuz are completely false

4. OPEC+ agrees to raise September oil production quotas by 188,000 barrels per day

5. Waugh considers reducing the frequency of Federal Reserve policy meetings

6. Barkin: Whether interest rates are high enough remains an open question

【Details】

Trump Says He Has Agreed to Call Off Strikes Against Iran

On August 1 local time, U.S. President Donald Trump said on social media that he had agreed to call off strikes against Iran. Trump said Iran and other Middle Eastern countries had just asked the United States to suspend any attacks because the parties had reached agreement on a framework for a deal. The agreement would include the immediate, complete and full reopening of the Strait of Hormuz, as well as an end to Iran's nuclear threat. Trump said he had agreed to cancel the strikes on that basis, provided that an agreement could be reached quickly. He added that Israel was also working with him toward that goal.

Japan's Finance Minister to Announce Joint U.S.-Japan FX Intervention to Support the Yen

Two Japanese government officials said Finance Minister Satsuki Katayama is expected to announce next Monday that Tokyo and Washington have taken coordinated action in the currency market to prevent further depreciation of the yen. Sources said Katayama is likely to emphasize the two countries' shared determination to counter excessive yen weakness and indicate that the intervention remains ongoing.

Market sources previously said U.S. and Japanese authorities had carried out multiple rounds of yen-buying operations. If confirmed, this would mark the first joint intervention since 2011, aimed at helping the yen recover from its lowest level since 1986.

Iran Says Reports of a Plan to Reopen the Strait of Hormuz Are Completely False

Iran's Fars News Agency on August 2 quoted sources as saying that reports of a plan to reopen the Strait of Hormuz were completely false. One source said no agreement had been reached on reopening the Strait of Hormuz and that reports to the contrary were rumors.

Another military source familiar with the matter stressed that the Strait of Hormuz would remain closed as long as the United States continued its hostile actions. Ships would only be allowed to transit through designated routes and would require permission from the naval forces of Iran's Islamic Revolutionary Guard Corps.

Earlier that day, Israel's Channel 12 reported that Iranian Foreign Minister Abbas Araghchi had agreed overnight to a U.S.- and Qatar-backed proposal to reopen the Strait of Hormuz, which it said had prompted President Trump to cancel a planned strike against Iran.

OPEC+ Agrees to Raise September Oil Production Quotas by 188,000 Barrels per Day

According to a statement, OPEC+ agreed to raise its September oil production quota by 188,000 barrels per day. Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman agreed to adjust their output and reaffirmed their commitment to maintaining market stability.

The group's next meeting is scheduled for September 6.

Waugh Considers Reducing the Frequency of Federal Reserve Policy Meetings

According to reports, Federal Reserve Chair Waugh is considering reducing the number of regular interest-rate policy meetings held by the central bank. Such a move could have major implications and would represent one of the most significant changes to the Fed's operating framework in recent years.

Currently, the 12-member Federal Open Market Committee (FOMC) meets eight times a year to vote on whether to raise, lower or maintain borrowing costs. Four people familiar with the matter said Waugh raised a proposal to adjust the frequency of meetings at this week's Fed meeting.

According to sources, Waugh discussed the legal requirements governing the minimum number of meetings the Fed must hold each year, as well as the potential timeline for such changes. He reportedly asked officials to provide their views rather than conducting a comprehensive discussion on the meeting schedule during this week's meeting.

Barkin: Whether Interest Rates Are High Enough Remains an Open Question

Federal Reserve official Thomas Barkin said last Friday that whether the level of interest rates set by the Fed is sufficiently restrictive to curb inflation remains an open question. He said he was uncertain whether he would have voted in favor of a rate hike, as three other regional Fed presidents did this week.

Barkin said there were solid reasons to tighten policy and reverse some of last year's rate cuts.

With inflation data easing in June, there is still time before the next policy meeting to assess whether the current policy stance remains appropriate.

【Today's Economic Calendar】

14:30 — Switzerland July CPI

22:00 — U.S. July ISM Manufacturing PMI

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