SINGAPORE: The dollar slumped against its major peers in Asian trading on Monday after the U.S. paused its bombing campaign in Iran during the weekend, prompting a drop in oil prices and boosting global investor confidence.
Against the yen, the U.S. dollar was down 0.2% at 163.585 yen, its biggest decline since July 10. The euro was up 0.3% at $1.1403, while the British pound rose 0.2% to $1.3352. Oil prices sank in early Asian trade, with Brent crude tumbling 4.2% to $92.74 after the U.S. military temporarily halted its two-week-long strikes.
Iran will halt its own attacks as long as the U.S. does the same, a senior Iranian official told Reuters on Sunday, following a China-led push to resume stalled diplomatic efforts in Pakistan to end the war.
"Markets remain on edge around the U.S.-Iran conflict and the path of oil prices," MUFG analysts wrote in a research report. "While it is difficult to know for sure how things will pan out, our base case remains for de-escalation over time for several reasons and as such for oil prices to decline."
In other major currencies, the New Zealand dollar was 0.1% higher at $0.5791, while its Australian counterpart was up by the same magnitude at $0.6996.
The U.S. dollar index, which measures the greenback's strength against a basket of six currencies, was flat at 101.21 at the start of a week packed with central bank meetings, including that of the Federal Reserve.
Traders' bets that the Federal Reserve could raise interest rates at its upcoming policy meeting eased a little compared to last week.
Fed funds futures are pricing an implied 33.7% probability of a 25-basis-point hike at the next two-day meeting ending on Wednesday, down from 37.4% on Friday, according to the CME Group's FedWatch tool. In cryptocurrencies, bitcoin was up 1% at $65,286.74, while ether climbed 1.7% to $1,945.22.
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