The dollar dips slightly on Tuesday against several currencies, with the yen firming after the Bank of Japan left interest rates unchanged and outlined a slower pace for reducing its balance sheet.
The move comes as global markets remain tense amid the fifth day of conflict between Israel and Iran.
The yen moves between gains and losses during the day, turning weaker during Bank of Japan Governor Kazuo Ueda’s press conference. Still, the dollar is down about 0.1% at 144.65 yen.
The BOJ’s plan reflects concerns over global risks, including instability in the Middle East and U.S. tariffs. Fukuoka Financial Group’s strategist Tohru Sasaki notes that the slower reduction in Japanese government bond purchases is likely due to volatility in the bond market and broader economic uncertainty.
Elsewhere, the euro trades slightly stronger at $1.1569, while the British pound slips 0.1% to $1.3564. U.S. President Donald Trump has signed an agreement to lower some tariffs on imports from Britain as both countries work toward a full trade deal.
The Australian dollar rises 0.22% to $0.6539. Against a basket of currencies, the dollar is down 0.1% at 98.124.
Tensions in the Middle East continue to weigh on investor sentiment. Trump on Tuesday says he wants a “real end” to the nuclear dispute with Iran and may send senior officials for talks. The White House earlier announced he would leave the Group of Seven summit early to monitor the situation.
Traders are watching how the conflict affects oil markets more than safe-haven flows. Brent crude prices have moved higher in response to the escalation.
The Federal Reserve’s interest rate decision due Wednesday is in focus, with the market expecting no change in rates. Investors will also follow decisions from the Bank of England and Sweden’s Riksbank later in the week.
