TOKYO/LONDON: There was a fragile calm across currency markets on Thursday as traders kept their eyes fixed on whether the ceasefire between the U.S. and Iran would hold, a day after its announcement sent the dollar tumbling across the board.
The deal appeared to be on thin ice, as Israel continued its parallel war against the Iran-aligned militia Hezbollah in Lebanon, while Tehran accused both Israel and the U.S. of violating the agreement and said that proceeding with peace talks would be "unreasonable."
The Strait of Hormuz also remained shut to vessels sailing without a permit and shippers said they before resuming transit, sending oil prices higher.
The euro was flat at $1.1661. It gained 0.6 percent on Wednesday, but retreated late in the day having touched a one-month high of $1.1721 earlier in the session. It was a similar story for the pound and Japanese yen.
The Japanese currency was slightly softer with the dollar up 0.2% at 158.9 yen, having briefly dropped below 158 on Wednesday.
With the Strait of Hormuz closed, "the entire ceasefire remains tenuous," said Derek Halpenny head of research global markets EMEA at MUFG. But, he added, "while the U.S. dollar has rebounded, the moves in general have been modest."
He said the fact that further talks scheduled in Pakistan were still going ahead was keeping any retracement of Wednesday's moves in check.
Japan's consumer confidence worsened in March for the first time in three months, a government survey showed on Thursday, adding to a recent pointing to the potential economic hit from the Middle East war, which would complicate the BOJ's rate-hike decision. The yen showed little reaction to the data.
Speaking in parliament, BOJ Governor Kazuo Ueda said real interest rates are clearly negative and keeping the country's financial conditions accommodative.
Other currencies were also broadly steady. The Swiss franc was flat at 0.7913 francs per dollar and 0.9228 per euro. The Australian dollar dropped 0.3% to $0.7024. ـــReuters
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