FOREX-Dollar slumps as signs of deal to reopen Hormuz spur risk appetite

The dollar slipped at ​the start of Asian trading on Monday ​as hopes of a deal ‌to reopen the ​Strait of Hormuz pushed oil prices below $100 per barrel, even as the Trump administration played down the chances of reaching an agreement ‌with Iran soon. Against the yen, the U.S. dollar was down 0.2% at 158.87 yen, while the euro rose 0.3% to $1.1642 and the British pound gained 0.4% to $1.3485.

The dollar slipped at ​the start of Asian trading on Monday ​as hopes of a deal ‌to reopen the ​Strait of Hormuz pushed oil prices below $100 per barrel, even as the Trump administration played down the chances of reaching an agreement ‌with Iran soon.

Against the yen, the U.S. dollar was down 0.2% at 158.87 yen, while the euro rose 0.3% to $1.1642 and the British pound gained 0.4% to $1.3485. Many global markets are closed for holidays on ‌Monday, thinning liquidity across the region.

The Australian dollar advanced 0.4% to $0.7160, while its kiwi counterpart tacked ‌on 0.5% to $0.5877. "There are early signs that risk sentiment remains supported, early Sydney trade revealing a broad-based selloff in the USD, with ‘riskier’ currencies like the AUD benefitting as a result," analysts from Westpac wrote in a research note.

Over the ⁠weekend, ​hopes for a lasting ⁠peace deal appeared fragile. U.S. President Donald Trump wrote on Saturday that a memorandum of understanding on a peace deal ⁠with Iran had been "largely negotiated," with both countries and mediators in Pakistan reporting progress. However, the U.S. blockade on ​Iranian ships in the Strait of Hormuz would "remain in full force and effect until an ⁠agreement is reached, certified, and signed," Trump wrote on Truth Social on Sunday. There was no immediate response from Iran's government.

Oil ⁠markets ​tumbled, as Brent crude prices fell 5.1% to $98.29 a barrel while U.S. West Texas Intermediate was at $91.76 a barrel, off 5%. Traders expressed cautious scepticism over whether a deal would stick.

"Markets have ⁠become conditioned to be incredibly patient on a tangible breakthrough, but the base case of a deal ⁠remains firm, with the ⁠weekend news providing further conviction, even if the timing remains unclear." said Chris Weston, head of research at Pepperstone Group Ltd in Melbourne. Bitcoin was up ‌0.6% at $77,043.60, ‌while ether was 0.4% higher at $2,099.77.