The dollar weakens as Trump’s remarks on Iran ease inflation fears. US CPI next week will reshape Fed rate expectations. The yen jumps on the investment plans of Japanese pension funds. Wall Street gains as AI and microchip stocks recover; gold rebounds
Trump says Iran really wants to ‘make a deal’
The currency continued to decline against its major pairs on Thursday, losing the most ground against the , which remained supported following the RBNZ’s hawkish rally. Today, the greenback remains in decline, with the yen experiencing the strongest increase.
After a less hawkish than expected speech on Wednesday, New York Fed President John Williams said on Thursday that he did not expect a sustained rise in oil prices, despite renewed tensions between the United States and Iran, while US President Trump said Tehran had reached out, wanting “so much to make a deal”, raising hopes that the two countries could eventually return to the negotiating table.
slipped about 5%, erasing some of the gains recorded on Tuesday and Wednesday, easing fears of another spiral out of control in inflation. As investors cut their bets again, Treasury yields and the U.S. dollar fell. According to federal funds futures, the probability of a rate hike by September fell from about 80% to 68%, while the probability of one happening later this month rose from 30% to 22%.
Barring another major escalation in hostilities between the United States and Iran that could lead to the reclosure of the Strait of Hormuz, dollar traders will likely turn their attention to June numbers next week. If the data shows a sharp slowdown amid falling energy prices later this month, traders could push back their bets on a Fed hike even further, adding further pressure on the U.S. dollar.
Japan to increase domestic exposure of its pension funds
The currency rallied during today’s Asian session, with the dollar/yen falling below the 162.00 area. The rise was triggered by news that the Japanese government was seeking to encourage its pension fund to increase its exposure to domestic assets.
Japan has the largest pension fund in the world, and therefore…
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