Dollar Recovers, Pound Under Pressure Ahead of BoE
The US dollar erased losses in the European session on Thursday (June 17th) after oil prices began to stabilize. The Bloomberg Dollar Spot Index briefly fell 0.2% after President Donald Trump signed an interim deal to end the war with Iran and reopen the Strait of Hormuz, but saw renewed demand after London trading opened.
The two-year US Treasury yield fell two basis points to 4.16%, while Brent briefly weakened toward $77 per barrel before paring losses. The now-in-force US-Iran deal has helped ease some energy pressures, but markets are still assessing its impact on inflation and interest rate policy.
The British pound weakened ahead of the Bank of England's interest rate decision and domestic political risks. GBP/USD fell 0.3% to 1.3260, a new two-month low, while overnight volatility rose to its highest level since late March. Investors are waiting to see whether the BoE will maintain interest rates or signal a more hawkish stance following the latest employment and inflation data.
In Asia, USD/JPY traded nearly flat at 160.69, near its highest level since July 2024. Markets remained wary of potential yen intervention after the Fed's hawkish stance pushed the Japanese currency to an area that previously prompted action from the Japanese Ministry of Finance.
EUR/USD fell 0.1% to 1.1492 from a session high of 1.1528. EUR/CHF rose 0.3% to 0.9221 after the Swiss National Bank kept interest rates unchanged and reiterated its readiness to sell francs if necessary. Meanwhile, EUR/NOK rose 0.2% to 11.0806, a two-month high, after Norges Bank held interest rates unchanged but signaled room for further tightening.
Among commodity currencies, USD/CAD rose 0.1% to 1.4120 and headed for its sixth daily gain, reflecting continued pressure on the Canadian dollar. NZD/USD briefly rose 0.5% to 0.5799 before paring some of its gains after New Zealand's economy grew 0.8% in the first quarter, supported by lower interest rates and a rebound in spending.
The foreign exchange market's next focus will be on the Bank of England's decision, the direction of oil prices following the US-Iran deal, and the response of major currencies to the Fed's hawkish signals. As long as the dollar remains supported by expectations of higher US interest rates, pressure on sterling, the yen, and commodity currencies is likely to persist. (arl)
Source: Newsmaker.id
