Trump Bets on a Final Chance for Talks as Japan Steps Up Yen Intervention

Daily News

Summary:

Trump says talks with Iran represent the final opportunity; Japan may have spent $36.5 billion last Friday to support the yen, signaling an escalation in intervention efforts...

【Highlights】

1. Trump says talks with Iran are the final opportunity and announces plans to reopen the Strait of Hormuz

2. Japan may have spent $36.5 billion last Friday to support the yen, escalating intervention efforts

3. Senior Iranian official: The U.S. will not be allowed to establish a non-Iranian shipping route through the Strait of Hormuz

4. Iran believes Trump favors negotiations over further escalation

5. U.S. manufacturing activity expands at its fastest pace since 2022

6. Trump again calls on oil companies to lower gasoline prices

【Details】

Trump Says Talks with Iran Are the Final Opportunity and Announces Plans to Reopen the Strait of Hormuz

U.S. President Donald Trump said Monday in the Oval Office that talks between the United States and Iran are underway, with discussions covering the reopening of the Strait of Hormuz and Iran’s nuclear program. Trump described the talks as Iran’s final opportunity to sign a favorable agreement and said Saudi Arabia, the United Arab Emirates, Qatar and other countries also support the negotiations. Trump said he had decided to give Tehran one final chance before taking further military action.

Regarding the Strait of Hormuz, Trump said, “We are talking about fully reopening the Strait of Hormuz today.” He added that he expected the negotiations to move forward quickly.

After the issue of the strait, the discussions will also address Iran’s nuclear capabilities. However, the two sides remain divided over the nature of the current contacts. Iranian Foreign Ministry spokesperson Esmaeil Baghaei said it was necessary to clarify the subject and parties involved in the talks to avoid any misunderstanding. “We are not currently negotiating with the United States,” he said. Iran emphasized that its discussions with Oman are limited to security and navigation arrangements concerning the Strait of Hormuz.

Trump, meanwhile, insisted that diplomatic efforts were progressing well and denied that the negotiations had reached an impasse. He said Iran had not rejected the talks but questioned why Iranian officials were unwilling to acknowledge that negotiations were taking place. For now, the diplomatic standoff remains centered on reopening the Strait of Hormuz and addressing Iran’s nuclear program, while Gulf states are actively seeking solutions to prevent another escalation in regional tensions.

Japan May Have Spent $36.5 Billion Last Friday to Support the Yen, Escalating Intervention Efforts

Money market data released by the Bank of Japan on Monday indicated that Japanese authorities may have spent as much as $36.58 billion on foreign exchange intervention last Friday to support the yen, which has been trading near historic lows. The move would represent one of the more aggressive interventions in the recent series of efforts to stabilize the currency.

The BOJ’s estimates of money market conditions for the following day showed a net outflow of ¥11.4 trillion, far above the ¥5.66 trillion to ¥6.70 trillion range forecast by brokers. Such a large deviation is typically viewed as a clear signal of official intervention. Markets had already been alert to the risk of intervention, and the latest data further underscored the Japanese authorities’ determination to support the yen amid persistent depreciation pressure.

Despite the substantial scale of the potential intervention, the market’s focus remains on the subsequent trajectory of the yen and whether Japanese authorities can maintain their support. The tug-of-war between yen bears and official intervention is likely to continue, with the currency’s near-term direction depending on the pace of liquidity operations by the BOJ and whether the broader macroeconomic environment is supportive.

Senior Iranian Official: U.S. Will Not Be Allowed to Establish a Non-Iranian Shipping Route Through the Strait of Hormuz

On August 3 local time, Mohsen Rezaei, a military adviser to Iran’s Supreme Leader, said in an interview with the media that Iran would never allow the United States to establish any non-Iranian shipping route through the Strait of Hormuz. He warned that even if the United States deployed warships along what Iran considers an illegal route through the strait, Iran would treat them as targets.

Rezaei also said that Iran had previously prepared to strike three locations in Ukraine but called off the attacks after Ukraine apologized.

Iran Believes Trump Favors Negotiations Rather Than Escalation

Iranian leaders reportedly believe that Trump is seeking to use military threats as leverage rather than launch a large-scale war. Tehran believes it can withstand external pressure by relying on regional proxies and continuing to put pressure on global shipping until Washington shifts toward a diplomatic approach.

Despite Trump’s repeated warnings of possible military action, Iran has reached this assessment while emphasizing that there are currently no plans for direct negotiations with the United States.

U.S. Manufacturing Activity Expands at Fastest Pace Since 2022

U.S. manufacturing activity rose to its highest level in more than four years in July, as strong growth in new orders boosted factory employment. However, the conflict in the Middle East is disrupting supply chains and driving up input costs.

The Institute for Supply Management (ISM) said the manufacturing Purchasing Managers’ Index (PMI) rose to 55.6 in July from 53.3 in June, marking its highest level since May 2022. Economists had previously expected the index to rise modestly to 54.0. The new orders sub-index increased to 56.7 from 56.0 in June.

Trump Again Calls on Oil Companies to Lower Gasoline Prices

Trump again called on oil companies to lower the gasoline prices paid by U.S. consumers and criticized Chevron CEO Mike Wirth for failing to acknowledge his administration’s efforts to support the oil industry. Trump accused Wirth of failing to mention his administration’s assistance to oil companies during a television interview, including efforts to create opportunities for these companies in Venezuela.

Trump wrote on social media that the one thing Wirth failed to mention was that without the “genius, vision, strength and stability” of the Trump administration, the oil industry—and the country itself—would have been in serious trouble.

Trump cited Chevron as an example, saying that the company and Wirth had previously been pushed out of Venezuela but had now returned on a much larger and stronger footing and were prepared to make substantial profits. In a post on his social media platform Truth Social, Trump said the same was true of other oil companies and called on them to lower the prices consumers are paying for gasoline immediately.

Today’s Key Events

11:05 (UTC+8) Reserve Bank of Australia Governor Michele Bullock speaks

21:00 (UTC+8) U.S. May FHFA House Price Index MoM

22:00 (UTC+8) U.S. July Conference Board Consumer Confidence Index

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