Dollar eases as US-Iran deal hopes grow, yen firms on intervention speculation

HONG KONG: The dollar fell against most major currencies on Wednesday after the U.S. signalled it may be nearing a ​deal with Iran, while the Japanese yen strengthened sharply to a more than two-month high ‌as markets braced for another intervention.

The yen was last at 155.00, up nearly 2% to its strongest level since February 24. It had lagged broader dollar weakness earlier in the session before a sudden move higher, triggering speculation of ​another round of intervention.

Japanese Finance Minister Satsuki Katayama earlier in the week warned against speculative moves ​in foreign exchange, after a brief jolt higher in the yen sparked speculation ⁠Tokyo had again intervened to support the currency.

"As I have said repeatedly, we will take decisive measures ​against speculative moves, in accordance with the statement signed between Japan and the United States last year," ​Katayama told reporters after the Asian Development Bank's annual meeting in Uzbekistan.

The Ministry of Finance of Japan could not be reached immediately for comment during a local holiday.

Most other major currencies also extended gains as dollar weakness persisted, after ​President Donald Trump said he would briefly pause an operation to help escort ships through the Strait ​of Hormuz, citing progress toward a comprehensive agreement with Iran.

That came shortly after U.S. Secretary of State Marco Rubio said on ‌Tuesday ⁠that the United States has achieved its objectives in its military campaign against Iran.

U.S. oil futures fell on Wednesday, with U.S. West Texas Intermediate softening to near $100 per barrel.

"The signals sent from the United States appear to offer reassurance that it's not interested in renewing hostilities," said Kyle Rodda, senior analyst at Capital.com.

However, ​this isn't all good ​news with oil still ⁠trapped and the Strait still closed, he added. "That suggests upward pressure on oil will persist, which could cause a headache for the markets once again down ​the line."

The euro stood at $1.1740 and sterling traded at $1.3594 , both up roughly ​0.4% so far ⁠on the day.

The Australian dollar fetched a four-year high of $0.7250 , and the New Zealand dollar was up more than 1% at $0.5951, highest in nearly two months.

The dollar index fell nearly 0.3% to 98.026.

The markets are ⁠now gearing ​up for non-farm payrolls release later this week, which will serve ​as a test whether the economy remains resilient enough to keep the Federal Reserve's monetary policy on hold, or whether a softening ​labour market could revive the case for interest rate cuts.