Dollar Weakens After Iran Negotiation Signals, Yen and Franc Strengthen
The US dollar fell against all Group-of-10 currencies on Wednesday (March 4) after media reports indicated Iran was approaching the table to discuss terms for ending the war. Risk-off sentiment briefly dominated the Asian session, before the dollar reversed its advance and Treasury yields pared initial gains.
The Bloomberg Dollar Spot Index reversed gains and fell around 0.3% today, while the dollar's earlier gains began to ease after the Tokyo fix. In the bond market, 2-year and 10-year Treasury yields also pared initial gains, reflecting a easing of safe-haven bids for the dollar despite persistent geopolitical uncertainty.
The USD/JPY pair weakened around 0.6% to 156.86, amid Japanese Finance Minister Satsuki Katayama's statement that the government is ready to act to curb excessive foreign exchange fluctuations, including through intervention. Short-term hedging costs also rose, with one-week risk reversals moving 225 bps in favor of the yen, indicating increased demand for hedge funds.
In Europe, EUR/CHF rebounded 0.2% to 0.90986 after Swiss National Bank Deputy Chairman Antoine Martin stated that the SNB's readiness to intervene in foreign exchange markets increased in line with geopolitical developments.
Meanwhile, EUR/USD rose 0.2% to 1.1636, AUD/USD strengthened 0.4% to 0.7061, and EUR/GBP remained relatively stable at 0.8692. These movements occurred as markets continued to assess the balance between geopolitical risk premiums, surging energy prices, and their implications for inflation and global interest rate expectations.
Source: Newsmaker.id
