The US dollar fell yesterday, reversing earlier gains, on optimism that a ceasefire deal in the Iran war will be reached despite renewed tensions between Washington and Tehran over the weekend.
“The market seemed to have had a knee-jerk panic reaction to the weekend developments when it first opened last night. But the price action since then has leaned towards a bit of a relief and a renewed sense of hope for a resolution,” said Eric Theoret, a foreign exchange analyst at Scotiabank.
The euro was last up 0.12 per cent at $1.1776 after hitting a one-week low of $1.1726 earlier in the session, while sterling was up 0.12pc to $1.353. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.33pc to 98.13. It earlier reached a one-week high of 98.47. The index is down 1.75pc in April. It had surged 2.27pc in March on safe-haven demand after the war broke out.
“We reached a peak of fear in late March and we’ve been slowly recovering,” Theoret said.
Now in its eighth week, the war has created the most severe shock to energy supplies ever, sending oil prices surging because of the de facto closure of the Strait of Hormuz, which typically handles about a fifth of the world’s oil shipments.
The Japanese yen strengthened 0.02pc against the greenback to 158.62 per dollar and remained below the crucial 160 level that traders worry could lead to intervention to support the Japanese currency.
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