The dollar index edged lower on Thursday as markets increasingly priced in the possibility of a US-Iran agreement to end current tensions.
Optimism improved after Tehran confirmed it was reviewing a US proposal, even though key disagreements remain unresolved.
The prospect of de-escalation weighed heavily on oil prices, helping ease inflation concerns that had dominated markets over the last few weeks. As energy prices retreated, long-term Treasury yields also moved lower. However, central banks are still expected to maintain a cautious monetary policy. Interest rates in the US are anticipated to remain unchanged for an extended period, which could support the dollar and help limit losses.
Attention now turns to labour market data, with initial jobless claims due later today ahead of Friday’s closely watched non-farm payrolls report. These releases could influence expectations around the Fed’s monetary policy path and could inject volatility into both currency and bond markets in the case of a surprise. Meanwhile, Japanese interventions to support the yen may also weigh on the dollar in the near term.
Leave a Comment