Dollar slumps in broad risk rally after Trump announces Israel-Iran ceasefire
Against a basket of currencies, the US dollar was slightly lower at 98.12, extending its more than 0.5% decline in the previous session. (Reuters pic)
SINGAPORE : 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.
However, 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% higher at US$0.6493 as did the kiwi, which rose 0.55% to US$0.6009.
Israel's shekel rallied sharply too, jumping 1% 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,' Catril said.
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% at 145.45.
The euro rose 0.23% to US$1.1605 and sterling advanced 0.27% 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 US is a net exporter.
Adding to headwinds for the dollar were dovish comments from Federal Reserve (Fed) 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% 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,' Sycamore.
Markets are now pricing in close to a 23% chance the Fed could ease rates in July, up from 14.5% a day ago, according to the CME FedWatch tool.
In cryptocurrencies, Bitcoin rose more than 1% to US$105,155.52, while Ether jumped 2.7% to US$2,412.54, in a reflection of the positive risk sentiment.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New Straits Times
33 minutes ago
- New Straits Times
No significant impact on Philippine economy from Iran-Israel conflict: Marcos
MANILA: Philippine President Ferdinand R. Marcos Jr has assured that the ongoing tensions in the Middle East have had "no significant effect" on the Philippine economy, though the government is closely monitoring for potential price manipulation, Philippines News Agency (PNA) reported. Speaking to reporters in Tarlac on Wednesday, Marcos said the impact of the Iran-Israel conflict remains manageable, based on assessments made during a meeting with his economic team at Malacañang on Tuesday. "So far, there is no effect. No significant effect on the economy," he said. Marcos, however, noted that the government is on alert for price gouging, citing instances of unjustified price increases despite stable oil prices. "We're monitoring price gouging, because I've seen many prices going up even though oil prices haven't increased. That's our focus now," he added. He acknowledged that while the crisis in the oil-rich region could potentially affect global prices, crude oil had declined to US$69 from US$79 following the ceasefire agreement between Iran and Israel. Asked whether fuel subsidies would be extended to public utility drivers and other sectors despite the drop in prices, Marcos said such assistance would only be considered if prices surge. "If prices don't increase, then there's no need for subsidies. We're not referring to aid but to targeted subsidies, which will only be triggered if oil prices rise," he explained. Marcos stressed that for now, it remains "business as usual" for the country. "The price of oil hasn't gone up. It rose for a day and then came back down. So we don't need to talk about subsidies yet," he said.
The Star
an hour ago
- The Star
Gold rises as US yields, dollar slip; markets watch Israel-Iran truce
GOLD prices edged higher on Wednesday, supported by a pullback in the U.S. dollar and Treasury yields, as markets monitored the fragile truce between Israel and Iran. Spot gold was up 0.1% at $3,328.18 per ounce, as of 0425 GMT, after hitting on Tuesday its lowest level in more than two weeks. U.S. gold futures rose 0.3% to $3,342.30. The dollar index hovered near a one-week low, making greenback-priced bullion more attractive for other currency holders. The benchmark 10-year Treasury yields remained near a more than one-month low. "The technical selling of the dollar and weaker U.S. Treasury yield have benefited gold prices," OANDA senior market analyst Kelvin Wong said. A potential catalyst for a gold breakout could be further weakness in the dollar, renewed focus on the U.S. fiscal deficit, and tariff policy, especially as Iran-Israel tensions ease, Wong added. The ceasefire brokered by U.S. President Donald Trump between Iran and Israel appeared to be holding on Wednesday, a day after both countries signalled that their air conflict had ended, at least for now. U.S. consumer confidence unexpectedly deteriorated in June as households increasingly worried about job availability, another indication that labor market conditions were softening amid rising uncertainty from Trump's tariffs. Higher tariffs could begin raising inflation this summer, a period that will be key to U.S. Federal Reserve's consideration of possible rate cuts, Fed Chair Jerome Powell told members of Congress on Tuesday. Fed funds futures traders are now pricing in 60 basis points of rate cuts for 2025, with the first move expected to come in September. According to a report by the Official Monetary and Financial Institutions Forum, one in three central banks managing a combined $5 trillion plan to increase exposure to gold over the next 1-2 years, the highest in at least five years. Elsewhere, spot silver was up 0.1% at $35.95 per ounce, platinum fell 0.2% to $1,314.75, while palladium was down 0.4% at $1,062.24. - Reuters
Barnama
an hour ago
- Barnama
NATO Leaders to Sign Off on Massive Increase in Defence Spending
THE HAGUE, June 25 (Bernama-dpa) -- NATO leaders on Wednesday are to formally approve a massive hike in defence spending aimed at financing the alliance's largest rearmament programme since the Cold War, as allies ready for the possibility of a Russian attack on NATO territory, German Press Agency (dpa) reported. "This is a quantum leap that is ambitious, historic, and fundamental to securing our future," said NATO Secretary General Mark Rutte in The Hague, the site of this year's summit. On the second and final day of the meeting in the Dutch city, NATO allies are expected to commit to spending five per cent of gross domestic product (GDP) on defence and related expenses by 2035, following persistent pressure from US President Donald Trump to increase their defence budgets.
