2026-05-22T11:35:08+00:00
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Shafaq News
The dollar held near a six-week peak
on Friday, after conflicting signals over a U.S.-Iran peace deal whipped up
volatility across financial markets, though investors latched on to hopes of
some progress.
Washington and Tehran stuck to
opposing stances over the latter’s uranium stockpile and control of the Strait
of Hormuz, although U.S. Secretary of State Marco Rubio said there had been
“some good signs” in talks.
The mixed messages whipsawed markets
overnight, though currency moves were largely subdued in Asian trade on Friday
as investors awaited more clarity.
The dollar was a touch higher and
stood at 99.23 against a basket of currencies, not far from a peak of 99.515
hit in the previous session, its highest since April 7.
The euro, which was headed for a
second weekly loss, was down 0.1% on the day at $1.1607, while the pound was
slightly lower at $1.342, having shrugged off data earlier that showed retail
sales dropped by the most in nearly a year in April, as consumers felt the
pinch of the inflationary effects of the Iran war.
The dollar found additional support
from U.S. data, which showed weekly jobless claims fell last week while
manufacturing activity rose to a four-year high in May, underscoring resilience
in the world’s largest economy.
“We’re coming to the end of
week 12, we’re six weeks in the ceasefire, and I’m just not really that
convinced we’re any closer to a resolution between the U.S. and Iran,”
Tony Sycamore, a market analyst at IG, said of the Middle East war.
“I still feel like the risks
are for the U.S. dollar to go higher, because I really just don’t see a way
out of this situation in the Middle East without them sort of needing to be
more forceful.”
ASIAN CURRENCIES UNDER PRESSURE
The U.S. dollar’s strength and
persistently high oil prices have spelled pain for the yen, which on Friday
struggled on the weaker side of 159 per dollar. It was 0.1% lower at 159.09
per dollar.
The yen is teetering even after
likely intervention from Tokyo just weeks ago to support it. It has given up
nearly 75% of its gains from the presumed intervention, which has left traders
on alert for further moves by Japanese authorities.
“It’s just buying time, really.
What they need is a change in fundamentals, and I think the best thing that
could happen is a quick deal to end the Iran conflict,” said Lee Hardman,
a currency strategist at MUFG.
“I don’t think you’d see
dollar/yen drop too sharply from here, but even if it just got back down into
the mid 150s, taking some of the selling pressure off the yen, that would
probably be the best they can hope for right now.”
The Bank of Japan is only expected
to raise borrowing costs gradually while other central banks, including the
European Central Bank, are likely to deliver hikes far more quickly, which puts
the yen at a disadvantage with investors who seek out extra returns from
higher domestic interest rates.
On a trade-weighted basis, the yen
is at record lows, which favours its exporters but compounds the energy-price
shock, given Japan’s reliance on imported goods.
Data on Friday showed Japan’s core
inflation slowed to a four-year low in April, complicating the outlook for BOJ
policy.
Currencies in emerging Asia have
also come under immense pressure owing to the surge in global oil prices,
forcing policymakers to take increasingly urgent and unusual steps to shore up
their economies.
Earlier this week, Indonesia
announced all exporters of natural resources must store 100% of their export
revenues in state-owned banks from June 1, in a move to support the plummeting
rupiah.
The rupiah was pinned near a record
low on Friday at 17,710 per dollar.
(REUTERS)
Only the headline is edited by
Shafaq News.
