US-Iran Peace Negotiations in Focus, Dollar Remains Strong
The US dollar index (DXY) held relatively steady on Friday (May 22) at 99.30, near a six-week high, as investors assessed progress in US-Iran peace negotiations. EUR/USD fell 0.2% to $1.1599, while GBP/USD weakened 0.1% to $1.3424 after UK retail sales data showed the biggest drop in nearly a year, impacted by high prices.
The dollar remained strong above pre-war levels, driven by its safe-haven status during the crisis, as well as the perception that the US economy, as a major energy exporter, was relatively insulated from the surge in oil prices caused by the conflict. The rising dollar and high oil prices pressured the yen, while several emerging market currencies, including the Indonesian rupiah, faced pressure from the government's policy of depositing export proceeds in state banks.
Peace negotiations were in the spotlight. Iran's Foreign Minister met with Pakistan's Interior Minister to discuss a framework for resolving the conflict, two days after Pakistan delivered the latest US message. US Secretary of State Marco Rubio said there were "good signs" in the discussions, though he remained cautious.
However, tensions remain. A Reuters report said Iranian Supreme Leader Mojtaba Khamenei ordered that enriched uranium not leave the country, although the White House denied the report. The ceasefire between the US and Iran has lasted longer than the initial phase of the attack since February, while the Strait of Hormuz remains virtually closed, keeping oil prices high and raising concerns about global inflation.
Variables to monitor: progress in US-Iran negotiations, oil prices, the status of the Strait of Hormuz, and the movement of the dollar against global currencies. (Arl)*
Source: Newsmaker.id
