Vassilis Karamanis

The US bond buyback pledge that whipsawed markets this week is prompting comparisons with policies in Japan, where efforts to contain borrowing costs resulted in prolonged currency weakness.

The dollar finished its best week in a month as investors returned to the traditional haven amid heightened geopolitical tensions.

Sterling hit its strongest level in a year as speculation incoming Prime Minister Andy Burnham will name a markets-friendly Chancellor of the Exchequer accelerated a shift away from bearish positions on the UK currency.

Currency traders are starting to buy protection against bigger exchange-rate swings after months of calm, as banks warn that shifting Federal Reserve expectations and elevated geopolitical tensions could be about to jolt markets.

The yen surged 3%, its biggest gain in almost two years, after Japan intervened in the foreign-exchange market following a “final” warning by officials to investors against selling the currency.

The euro is the second-best G-10 performer against the dollar over the past month, defying expectations that the energy shock caused by the Middle East war would hit Europe’s economy and drag the currency lower.

Currency traders are loading up on protection against extreme moves as they brace for what comes next in the Middle East.

As war spirals in the Middle East, one driver is increasingly overshadowing others when it comes to the US dollar: the price of oil.

The Swiss franc’s rally may be running out of steam, history and charts suggest, after its latest burst of strength ran into a familiar obstacle: the Swiss National Bank.

The pound fell to its lowest level against the euro in more than two months and traders paid for protection against further losses after a special election in Manchester signaled trouble ahead for the governing Labour Party.