Dollar Weakens Amid Hopes for an Iran-US Deal
The US dollar weakened against most major currencies on Wednesday (May 6), as investors grew more optimistic about the prospects for an end to the war with Iran. This positive sentiment prompted market participants to shift to riskier assets and reduced demand for the dollar as a safe haven.
A source from Pakistan, a mediator, said Washington and Tehran were closer to reaching an agreement on a one-page memorandum to end the conflict. This news corroborates an earlier report from Axios and boosted market expectations for de-escalation in the Middle East.
The US dollar index fell 0.4% to 97.941, after touching 97.623, its lowest level since before the US attack on Iran in late February. The euro strengthened 0.6% to US$1.1755, while the pound sterling rose 0.6% to US$1.36125.
The strengthening appetite for riskier assets also pushed the Australian dollar to a four-year high of around US$0.7237. This increase was also supported by the Reserve Bank of Australia's decision to raise interest rates for the third time this year.
In Japan, the yen surged sharply, sending the dollar down 1.1% to 156.13 yen, after briefly touching 155. This rapid movement sparked speculation that Japanese authorities would intervene again to support the yen, although there has been no official confirmation from the Japanese Ministry of Finance.
Looking ahead, the market will closely monitor the release of US non-farm payrolls this week. This employment data will provide important clues as to whether the US economy remains strong enough to keep the Fed on hold or is starting to weaken, opening the door to a rate cut.
Source: newsmaker.id
