Dollar steadies, set for weekly loss on US-Iran deal talks
Market Reactions and Key Developments
By Chibuike Oguh
NEW YORK, June 12 (Reuters) - The dollar steadied on Friday but remained on track for a weekly loss, as markets monitored negotiations over a deal that could end the Middle East conflict.
Traders were also digesting unprecedented demand for shares in SpaceX, which raised $75 billion in an initial public offering and jumped about 20% in its Nasdaq debut.
The euro was little changed at $1.15725, hovering near a one-week high and set for a weekly gain after the European Central Bank delivered its first interest rate hike in three years on Thursday.
Peace Deal Negotiations
PEACE DEAL
Leaked Terms and Political Reactions
Leaked terms of a proposed memorandum to end the war in the Gulf, outlined by Western, Pakistani and Iranian sources on Friday, appeared to favor Iran, drawing criticism from U.S. President Donald Trump who called the reports inaccurate.
Trump's announcement on Thursday regarding a deal had prompted Wall Street shares to rally, oil prices to slip and the U.S. dollar to fall.
Market Assessment and Investor Sentiment
Markets are pausing as they assess the prospects for peace and the impact of the SpaceX IPO, with investors watching whether funds will shift from equities or cash, said John Velis, FX and macro strategist at BNY.
"The hoped-for good news on the ceasefire in the Middle East had a big reaction overnight and I think we came in this morning and we have the SpaceX IPO and a bunch of central bank meetings next week," Velis said.
Currency Market Movements
Dollar Performance Against Major Currencies
The U.S. dollar was up 0.18% against Japan's currency at 160.225 yen, holding near a key level that often triggers concern about intervention from Tokyo.
The pound was steady at $1.34145. Data showing the UK economy contracted in April had little impact, with markets focused on Iran talks.
The U.S. dollar index, which measures the greenback against a basket of six currencies, was flat at 99.75 after hitting a one-week low on Thursday.
Safe-Haven Flows
Investors have tended to buy the safe-haven dollar when tensions in the Iran war flare, and sell it in favor of riskier assets such as stocks when peace talks appear to make progress.
Federal Reserve and Economic Data
Upcoming Fed Meeting
FED IN VIEW
Data on Thursday showed U.S. producer prices increased more than expected in May, ahead of Kevin Warsh's first rate-setting meeting as chair of the Federal Reserve next week.
Rate Expectations
Traders expect the Fed to keep rates steady at 3.5% to 3.75%, but see a greater than 50% chance of a hike by year-end. Pricing edged slightly lower on Thursday after Trump's comments on a potential deal.
Other Currency and Crypto Movements
Against the Swiss franc, the dollar strengthened 0.21% to 0.79680.
In cryptocurrencies, bitcoin gained 0.40% to $63,595.26. Ethereum declined 0.29% to $1,665.87.
(Reporting by Chibuike Oguh in New York; Editing by Mark Potter and Edmund Klamann)
