Dollar Softer As Signs Of Deal To Reopen Hormuz Spur Risk Appetite

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The dollar held around its lowest levels in a week in Asian trading on Monday as hopes of a deal to ​reopen the Strait of Hormuz pushed oil prices below $100 per barrel, even as the ‌U.S. played down the chances of reaching an agreement with Iran soon.

Against the yen , the U.S. dollar was down 0.2% at 158.9 yen, while the euro rose 0.3% to $1.1636 and the British pound gained ​0.3% to $1.3476.

Many global markets are closed for holidays on Monday, thinning liquidity across ​the region.

The Australian dollar advanced 0.5% at $0.7162, while its kiwi counterpart tacked ⁠on 0.4% to $0.5869.

“There are early signs that risk sentiment remains supported, early Sydney trade ​revealing a broad-based selloff in the USD, with ‘riskier’ currencies like the AUD benefitting as ​a result,” analysts from Westpac wrote in a research note.

The U.S. dollar index , which measures the greenback’s strength against a basket of six currencies, slipped 0.1% to an intraday low of 98.95, its ​weakest level since May 18.

Oil markets tumbled on hopes of a peace ​deal, with Brent crude prices down 5.4% to $97.91 a barrel while U.S. West Texas Intermediate was ‌at $91.10 a ⁠barrel, off 5.7%.

Over the weekend, there were conflicting signs on a peace deal. U.S. President Donald Trump said on social media on Saturday that a memorandum of understanding on a peace deal with Iran had been “largely negotiated,” with both countries and mediators in Pakistan ​reporting progress.

However, on Sunday ​Trump said on Truth ⁠Social the U.S. blockade on Iranian ships in the Strait of Hormuz would “remain in full force and effect until an agreement is reached, ​certified, and signed”. There was no immediate response from Iran’s ​government.

In the ⁠markets, there was cautious optimism that a deal would eventually be reached.

“Markets have become conditioned to be incredibly patient on a tangible breakthrough, but the base case of a deal remains firm, with ⁠the weekend ​news providing further conviction, even if the timing ​remains unclear,” said Chris Weston, head of research at Pepperstone Group Ltd in Melbourne.

Bitcoin was up 0.5% at $76,961.76, while ​ether was flat at $2,091.65.

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