Central Bank Week Begins, Dollar Wobbly on Iran
The dollar weakened slightly on Monday (April 27) as oil prices strengthened, after efforts to resume peace talks over the Iran war stalled again and markets braced for a series of central bank decisions this week. The Bloomberg Dollar Spot Index fell 0.1%, while pro-risk currencies such as the Australian dollar and New Zealand dollar led gains in the G10, along with the Norwegian krone, as energy prices remained high amid the diplomatic deadlock.
The White House stated that US officials were still discussing Iran's latest proposal, but the deal's red lines remained intact. While the conflict remains unresolved, elevated oil prices keep inflation risks and an adverse scenario for the global economy open if tensions drag on into June-July. This is a key channel holding back dollar weakness and limiting risk appetite across assets.
In FX, EUR/USD remained relatively stable at 1.1723 amid signals from eurozone companies that expect higher input costs and selling prices due to the war, adding to inflation concerns for the ECB. GBP/USD edged up to 1.3536, while USD/JPY held around 159.40 ahead of the Bank of Japan (BOJ) meeting, which is expected to hold interest rates but with more hawkish communication due to the risk of yen depreciation and the issue of "lagging the curve." Citigroup believes USD/JPY has the potential to break through 160 if the BOJ is not sufficiently hawkish. AUD/USD rose 0.5% to 0.7187, while USD/CAD fell 0.3% to 1.3632 after Canada announced plans to establish a sovereign wealth fund with initial capital of C$25 billion to finance infrastructure projects. (Arl)*
Source: Newsmaker.id
