The dollar was roughly flat yesterday, as it retreated from earlier highs after US President Donald Trump rebuffed Iran’s response to a US peace proposal, which pushed oil prices higher and kept concerns about an extended war intact.
Trump’s swift rejection came days after Washington floated an offer aimed at reopening negotiations, while Iran on Sunday released a response focused on ending the war on all fronts, including Lebanon, where US ally Israel is fighting Iran-backed Hizbollah militants.
US crude rose 1.15 per cent to $96.52 a barrel and Brent rose to $103.03 per barrel, up 1.72pc on the day after Trump said the offer was “unacceptable,” raising supply fears as the Strait of Hormuz stayed largely closed.
The dollar index, which measures the US currency’s strength against a basket of six others, was little changed at 97.977. Oil prices jumped, with Brent crude up 2.5pc at $103.80 a barrel.
“When the US rejects Iran’s counter proposal what does that mean – does that mean the ceasefire is going to end? Or does it mean this is a new phase of negotiations?” said Marc Chandler, chief market strategist at Bannockburn Capital Markets in New York.
“The market seems to be waiting for something... it seems like right now it’s hard to find a consistent view through the markets.”
The dollar index, which measures the greenback against a basket of currencies, edged up 0.05pc to 97.89, with the euro up 0.01pc at $1.1785.
The Chinese yuan strengthened 0.08pc against the greenback to 6.791 per dollar after reaching 6.7885, its strongest level since February 2023.
Data earlier in the day showed China’s producer prices smashed expectations to hit a 45-month high in April on rising global energy costs.
That followed figures released over the weekend showing China’s export growth accelerated last month as factories raced to meet AI-related demand. US inflation data for April is due this week, with the consumer price index scheduled for today and the producer price index on Thursday.
Last week, the US jobs report released Friday showed that non-farm payrolls increased 115,000 in April, almost twice as much as expected, which further increased expectations the Federal Reserve was unlikely to cut interest rates this year.
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