Dollar Slips Against G10 After Ceasefire Signals
The US dollar weakened on Monday (April 6) against all Group-of-10 currencies after an Axios report suggested talks were underway for a potential ceasefire in the Iran war. This shift in sentiment fueled a rally in riskier currencies and dampened demand for the dollar as a safe-haven asset.
The Bloomberg Spot Dollar Index fell 0.3%. Meanwhile, the 10-year US Treasury yield rose 2 basis points to 4.36%, indicating the market continues to assess the path of interest rates and bond risk premiums separately from daily forex movements. Liquidity is also thin: DTCC data shows trading volumes hovering around 50% of the recent average as many European markets are closed on Monday, as are Australia, New Zealand, mainland China, and Hong Kong.
Axios reported that the US, Iran, and several regional mediators are discussing the terms of a 45-day ceasefire that could lead to a permanent end to the war, citing sources familiar with the talks. "We're seeing a risk-on FX rally from this headline," said Charu Chanana, a strategist at Saxo Capital Markets, but he cautioned that markets could once again "run ahead of diplomacy."
In major markets, AUD/USD rose 0.6% to 0.6934, while USD/SEK fell 0.9% to 9.3982. EUR/USD gained 0.3% to 1.1558, and GBP/USD gained 0.4% to 1.3251. USD/JPY fell 0.2% to 159.35, with additional attention on Japan after Prime Minister Sanae Takaichi said her country had secured naphtha supplies to cover at least four months of demand, alleviating concerns of a supply crunch.
Markets are now monitoring the credibility and details of the ceasefire talks, official responses from relevant parties, and whether the risk-on movement persists amid thin volume and rapidly changing geopolitical headlines.
Source: Newsmaker.id
