The Federal Reserve Bank of New York reported in its quarterly report to Congress that the U.S. Treasury purchased Japanese yen in foreign exchange markets from July through September 2026, while the Federal Reserve did not intervene. The dollar ended the quarter little changed overall, with movements broadly tracking interest rate differentials at shorter maturities between the United States and other advanced economies.
Early in the quarter, those differentials narrowed and the dollar weakened amid resilient foreign economic data and increased global inflation risks associated with higher energy prices as the Middle East conflict intensified again. These moves reversed later as stronger than expected U.S. economic data and communications from Federal Reserve officials prompted markets to price in a higher path for Federal Reserve policy rates. Across currencies, dollar depreciation against the Korean won, Japanese yen and Chinese renminbi was largely offset by appreciation against the euro and Mexican peso.