SINGAPORE - The dollar edged lower in Asian trading on Thursday as investors waited for clearer signals on the US-Israeli war on Iran and pared back expectations that the Federal Reserve’s next move would be a rate hike.
The US dollar index, which tracks the greenback against six major currencies, slipped 0.1 per cent to 99.576 after recording its biggest one-day rise in a week on Wednesday.
Markets remained cautious after Iran’s foreign minister said Tehran was reviewing a US proposal to end the war but had no intention of entering talks to halt the widening Middle East conflict.
That left investors focused on whether recent developments point to genuine de-escalation or simply a pause before further escalation.
“Markets remain decisively headline-driven,” Westpac analysts said in a note, adding that traders were trying to judge whether recent news signalled a real diplomatic opening.
The closure of the Strait of Hormuz has pushed energy prices sharply higher, prompting investors to rethink inflation risks and the likely path of U.S. interest rates.
Fed funds futures showed a 64.4 per cent probability that the Fed will keep rates unchanged at its December meeting, up from 60.2 per cent a day earlier, according to CME Group’s FedWatch tool.
“Lots of people have retreated to the sidelines,” said Mike Houlahan, director at Electus Financial in Auckland. He said any ceasefire or truce that sends oil prices lower could quickly remove the inflation premium now built into rates.
Against the yen, the dollar slipped 0.1 per cent to 159.39, staying near its strongest level since 2024. The move came as Japan’s two-year government bond yield touched its highest in nearly three decades.
The euro rose 0.1 per cent to $1.1570 after two days of losses, while sterling was little changed at $1.3365. The offshore yuan was steady at 6.905 per dollar.
The Australian dollar held at $0.6950 and the New Zealand dollar was steady at $0.5806.
In cryptocurrencies, bitcoin fell 0.2 per cent to $70,815.26 and ether slipped 0.7 per cent to $2,150.80. — REUTERS
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