Japanese officials warn against one-sided FX movesYen rallies as intervention voices become louderDollar retreats on dovish Fed rate cut bets; GDP data awaitedWall Street gains, gold and silver hit fresh record highs, oil reboundsTo Intervene or Not to Intervene?The US dollar underperformed against all its major peers on Monday, and it is extending its slide today, with the yen leading the race, turbocharged by renewed intervention warnings by Japanese officials.Yesterday, Japan’s top currency diplomat Mimura said that recent FX moves were one-sided and sharp and that the government should take appropriate action if deemed necessary, while Chief Cabinet Secretary Kihara also appeared concerned, noting that “the currencies should move in a stable manner, reflecting fundamentals.”The strongest warning came from Finance Minister Katayama today, who said that they have a free hand in dealing with excessive moves in the Japanese yen.Following last week’s rate hike by the Bank of Japan, intervention may now be more likely, as tighter monetary policy provides clearer evidence that the yen is deviating from fundamentals.Thus, if dollar/yen rebounds again and gets closer to the psychological round figure of 160.00, the risk of intervention could increase materially. Yes, Japanese officials have repeatedly said that they do not target a specific level, but history has shown that interventions take place near such zones.One of the main catalysts behind the yen’s recent weakness was Prime Minister Takaichi’s spending plans, but a BoJ hiking cycle together with further easing by the Fed in 2026 may be increasing the chance of a bearish reversal in dollar/yen. The biggest risk to that view is a less aggressive BoJ and a Fed staying “higher for longer”.Dollar Slides Ahead Of Shutdown-Delayed GDP DataAs for the broader weakness in the US dollar it may have been driven by outflows due to the retreat in dollar/yen, as well as by investors’ dovish bets about the Fed’s future course of action. Despite the Fed projecting only one quarter-point reduction for 2026, market participants remain convinced that around 60bps worth of cuts are warranted for next year.Today, dollar traders may pay attention to the preliminary GDP data for Q3, which was delayed due to the US government shutdown. Expectations are for a slowdown to 3.3% q/q growth rate from 3.8% in Q2, which is still a solid print, especially during a shutdown quarter. This could convince some dollar traders that 60bps worth of rate cuts by the Fed may be too many for next year, thereby allowing a small recovery in the greenback.However, with Q4 nearly over, preliminary data for Q3 may be treated as outdated. Traders may prefer to focus more on up-to-date releases and thus, any GPD-related recovery in the dollar may prove limited and short-lived.Stocks Gain, Gold Hits Fresh Record High, Oil Rebounds on GeopoliticsOn Wall Street, the weakness in the dollar and bets of a dovish Fed in 2026 pushed all three of the main indices higher, with the S&P 500 gaining the most. Expectations of lower interest rates result in higher present values for high-growth companies, like tech firms. What may have also helped the continued rebound in technology stocks may have been news that Nvidia (NASDAQ:NVDA) has told Chinese clients it aims to start shipping its second-most powerful AI chips to China before the Lunar New Year holiday, which is in mid-February.Gold and silver skyrocketed to new record highs, while oil prices rebounded strongly after the US attempted to seize oil tankers linked to Venezuela, while in the Russia-Ukraine war, Kyiv struck major Russian oil infrastructures.Oil prices rose sharply on expectations of further supply disruptions, while the continued attacks between Russia and Ukraine benefited the safe-haven metals as they dull the prospect of peace.