Global Markets React to Iran Deal Amid Monetary Policy Shifts

The dollar hit 10-day lows as a preliminary Iran-US war-ending deal spiked risk appetite. The yen hovered near 160 after the Bank of Japan's interest rate hike. Doubts linger over the Iran deal's impact on the Strait of Hormuz. Global markets are also eyeing impending Fed and BoE decisions.

The dollar maintained its position at 10-day lows on Tuesday, following a preliminary agreement between the U.S. and Iran to end the conflict, which in turn boosted investor risk appetite. Meanwhile, the yen hovered near the significant 160 mark after the Bank of Japan’s anticipated interest rate hike aimed at countering inflation.

President Donald Trump's announcement of the preliminary deal raised questions among shippers about the potential reopening of the Strait of Hormuz, suggesting that confidence may take weeks to restore. The Bank of Japan's interest rate hike, decided by a 7-1 board vote, signals concern over inflation, with Deputy Governor Shinichi Uchida emphasizing the need for vigilance against ascending price pressures.

Global financial markets viewed the Iran deal with cautious optimism, while currencies displayed limited movement as market participants awaited monetary policy updates from the Bank of England and the U.S. Federal Reserve. Concurrently, new Federal Reserve Chair Kevin Warsh faces scrutiny as he prepares to navigate his first meeting and potentially reshapes the Bank's communication strategy.