Dollar slumps in broad risk rally after Trump announces Israel-Iran ceasefire
SINGAPORE, June 24 — The US dollar fell today while its Australian and New Zealand counterparts rose after President Donald Trump announced a ceasefire between Israel and Iran, in news that sent investors cheering and sparked a risk rally across markets.
Trump announced a complete ceasefire between Israel and Iran, potentially ending the 12-day conflict that led millions of people to flee Tehran and prompted fears of further escalation in the war-torn region.
But there was no confirmation from Israel, and the Israeli military said Iran launched waves of missiles today just hours after the announcement. Trump later said the ceasefire 'is now in effect' and urged both countries to not violate it.
The risk-sensitive Aussie got a lift and last traded 0.5 per cent higher at US$0.6493 (RM2.76) as did the kiwi, which rose 0.55 per cent to US$0.6009.
Israel's shekel rallied sharply too, jumping 1 per cent against the dollar to its strongest level since February 2023.
'It's obviously positive news for risk sentiment,' said Rodrigo Catril, senior currency strategist at National Australia Bank, of the announced ceasefire.
'We need to obviously have a bit more detail in terms of exactly what all this means... I suppose it will be the conditions of the ceasefire, and what are the conditions for a more longer-lasting peace deal.'
The dollar, which last week drew support from safe-haven demand, fell broadly in the wake of the news.
Against the yen, the greenback was down 0.47 per cent at 145.45 .
The euro rose 0.23 per cent to US$1.1605 and sterling advanced 0.27 per cent to US$1.3564.
The yen and euro benefited from a slide in oil prices as both the EU and Japan rely heavily on imports of oil and liquefied natural gas, while the United States is a net exporter.
Adding to headwinds for the dollar were dovish comments from Federal Reserve policymaker Michelle Bowman, who said the US central bank should consider interest rate cuts soon.
Bowman's openness to cutting rates soon is supported by Fed Governor Christopher Waller, who said in a television interview last week that he would also consider a rate cut at next month's meeting.
Against a basket of currencies, the dollar was slightly lower at 98.12, extending its more than 0.5 per cent decline in the previous session.
Fed Chair Jerome Powell is due to testify before the US Congress today and tomorrow, where focus will be on the outlook for US rates.
'There appears to be increasing division among the ranks of the Fed board ahead of Fed Chair Powell's testimony,' said Tony Sycamore, a market analyst at IG.
'The chance of a July rate cut... is still underpriced. I think it should be higher than that.'
Markets are now pricing in close to a 23 per cent chance the Fed could ease rates in July, up from 14.5 per cent a day ago, according to the CME FedWatch tool.
In cryptocurrencies, bitcoin rose more than 1 per cent to US$105,155.52, while ether jumped 2.7 per cent to US$2,412.54, in a reflection of the positive risk sentiment. — Reuters per cent
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Sun
27 minutes ago
- The Sun
China touts ‘proactive attitude' over drug control after US criticism
BEIJING: China touted its 'proactive attitude' towards drug governance on Tuesday, a day after it tightened controls over two chemicals that could be used to make fentanyl. The fentanyl trade has long been a thorn in the side of relations between China and the United States, with Washington accusing Beijing of turning a blind eye, something it denies. China added two previously unclassified precursors -- 4-piperidone and 1-boc-4-piperidone -- to a list of substances subjected to stricter regulation from July 20, a statement said on Monday. 'This move is an independent initiative by the Chinese government to fulfil its obligations as a signatory to the UN drug control conventions,' foreign ministry spokesman Guo Jiakun told a regular briefing when asked if the move was done in cooperation with the United States. 'It aims to strictly regulate precursor chemicals and reflects... its role as a responsible major country,' he added. The US and China this month agreed to a temporary truce in a standoff that saw tariffs hiked to eye-watering levels and upended global supply chains. In May, Washington and Beijing agreed to drastically reduce these tit-for-tat tariffs for 90 days, but the US additional tariff rate remained higher than China's because it includes a 20 percent levy over President Donald Trump's complaints about Chinese exports of chemicals used to make fentanyl. The US has seen tens of thousands of deaths related to opioids like fentanyl annually, though the latest figures, for 2023, showed a decrease from the prior year. 'The US has ignored China's goodwill and unreasonably imposed on China fentanyl tariffs,' Guo said. 'If the US truly wants to cooperate with China, it should face up to objective facts, correct its mistakes and engage in dialogue with China on the basis of equality, respect and mutual benefit,' he added.
Barnama
an hour ago
- Barnama
Rubber Market Ends Lower On Weak Regional Cues, Oil Price Drop
By K. Naveen Prabu KUALA LUMPUR, June 24 (Bernama) -- The Malaysian rubber market ended lower today, in tandem with the downtrend in regional rubber futures markets, a dealer said. He said the market was also dragged down by the fall in crude oil prices. 'Oil prices declined sharply to their lowest in more than a week on Tuesday as United States (US) President Donald Trump said a ceasefire has been agreed between Iran and Israel, alleviating worries of supply disruptions in the Middle East,' he told Bernama. At the time of writing, Brent crude oil prices declined 2.53 per cent to US$69.67 per barrel. Nevertheless, he said further losses were capped by concerns over dwindling natural rubber raw material supply due to adverse weather conditions in major producer Thailand. 'Flash floods in Thailand ended a second consecutive decline in Japanese rubber futures on Monday, according to broker Hexun Futures. 'Thailand's meteorological agency has warned of heavy rainfall and accumulation that could lead to flash flooding from June 23-27,' the dealer said. At 3 pm, the Malaysian Rubber Board (MRB) reported that the price of Standard Malaysian Rubber 20 (SMR 20) dipped by 6.5 sen to 693.50 sen per kilogramme (kg), while latex in bulk declined by 1.5 sen to 587.00 sen per kg.
New Straits Times
2 hours ago
- New Straits Times
Central banks eye gold, euro, yuan as dollar dominance wanes
LONDON: The custodians of trillions of dollars of global central bank reserves are eyeing a move away from the greenback into gold, the euro and China's yuan as the splintering of world trade and geopolitical upheaval spark a rethink of financial flows. According to a report by the Official Monetary and Financial Institutions Forum (OMFIF) due to be published later on Tuesday, one in three of 75 central banks managing a combined $5 trillion plan to increase exposure to gold over the next one-to-two years after stripping out those planning to decrease, the highest in at least five years. The survey -- carried out between March and May -- gives a first snapshot of the repercussions of US President Donald Trump's April 2 Liberation Day tariffs that sparked market turmoil and a slide in the safe-haven dollar and US Treasuries. Gold, which central banks have already been adding at a record pace, was seen benefiting even further longer term, with a net 40 per cent of central banks planning to increase gold holdings over the next decade. "After years of record-high central bank gold purchases, reserve managers are doubling down on the precious metal," OMFIF said. The dollar, the most popular currency in last year's survey, fell to seventh place this year, OMFIF said, with 70 per cent of those surveyed saying the US political environment was discouraging them from investing in the dollar -- more than twice the share a year ago. In currencies, the euro and yuan stand to benefit the most from a diversification away from the dollar. A net 16 per cent of central banks surveyed by OMFIF said they plan to increase euro holdings over the next 12 to 24 months, making it the most in-demand currency, up from 7 per cent a year ago, followed by the yuan. But over the next decade, the yuan is more favoured, with a net 30 per cent of central banks expecting to increase holdings and its share of global reserves seen tripling to 6 per cent. Separately, three sources who deal directly with reserve managers, told Reuters they saw the euro as now having the potential to recapture the share of currency reserves lost following the 2011 euro debt crisis by the end of this decade. They cited more positive sentiment among reserve managers towards the euro following Liberation Day. That would mean a recovery to a roughly 25 per cent share of currency reserves, from around 20 per cent currently, representing a key moment in the bloc's recovery from the debt crisis that threatened the euro's existence. Max Castelli, head of global sovereign markets strategy and advice at UBS Asset Management, told Reuters that reserve managers made many calls after Liberation Day to ask if the dollar's safe-haven status was at risk. "As far as I remember, this question has never been asked before, not even after the great financial crisis in 2008." The average expectation for the dollar's share of global FX reserves in 2035 was 52 per cent, the OMFIF survey showed, remaining the No.1 reserve currency but seen down from the current 58 per cent. EURO'S MOMENT? OMFIF survey respondents expected the euro to reach about a 22 per cent share of global reserves in 10 years' time. "The euro's share of global reserves will almost surely rise over the next few years, not so much because Europe is viewed so much more favorably, but because the dollar's status is diminished," said Kenneth Rogoff, Harvard professor and former IMF chief economist, told Reuters by e-mail ahead of OMFIF's publication. But Europe could attract a higher share of reserves sooner if the bloc is able to boost its pile of bonds that are currently dwarfed by the $29 trillion US Treasury market, while integrating its capital markets, the sources that speak directly to reserve managers, told Reuters. ECB President Christine Lagarde has also urged action to bolster the euro as a viable dollar alternative. The euro is the "only real alternative currency for the moment to make a significant change in the level of reserves," said Bernard Altschuler, global head of central bank coverage at HSBC, adding he saw it as "realistic" for the euro to reach a 25 per cent share of global reserves in 2-3 years if those issues are addressed. The European Union is the world's largest trading bloc. Its economy is far bigger than the dollar's other rivals. Capital controls limit the appeal of the yuan. Momentum for change has gathered pace, with Europe signalling willingness to curb its dependence on the US by boosting defence spending, including through more joint EU borrowing. Germany is ramping up spending, while the EU is trying to revive efforts to integrate its capital markets. Public pension and sovereign wealth funds, also surveyed by OMFIF, saw Germany as the most attractive developed market. UBS Asset Management's Castelli said he was receiving many more questions about the euro, estimating the euro could recover to a 25 per cent share of reserves by the end of the 2020s. At the most bullish end, Francesco Papadia, who managed the ECB's market operations during the debt crisis, estimated the euro could recover to 25 per cent in as soon as two years. Reserve managers he holds discussions with were more willing to look at the euro than before, Papadia, senior fellow at think-tank Bruegel, said. Zhou Xiaochuan, China's central bank chief from 2002 to 2018, agreed the euro's role as a reserve currency could grow. However, there's "homework to do," he told Reuters on the sidelines of a recent conference.
