Dollar steady, set for weekly losses on US-Iran deal talks

The dollar was steady on Friday but remained on track for weekly losses, as markets monitored negotiations on 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 nearly 20% in its Nasdaq debut.

The euro was little changed at $1.15725, near a one-week high and set for a weekly gain after the European Central Bank raised interest rates for the first time in three years on Thursday.

peace deal

The leaked terms of a proposed memorandum to end the war in the Gulf, indicated by Western, Pakistani and Iranian sources on Friday, appeared to favor Iran, with US President Donald Trump criticizing the reports as inaccurate.

Trump’s announcement of the deal on Thursday sent Wall Street stocks higher, oil prices down and the US dollar down.

John Wallis, macro strategist at FX and BNY, said markets are pausing as he assesses the prospects for peace and the impact of the SpaceX IPO.

“The promising good news about 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,” Vallis said.

The US dollar was up 0.18% against the Japanese currency at 160.225 yen, near a key level that often raises concerns 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 the Iran talks.

The US 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.

Investors have tended to buy the safe-haven dollar when tensions flare over the Iran war, and sell it in favor of riskier assets like stocks when peace talks appear to be making progress.

Fade in view

Thursday’s data showed that US producer prices rose more than expected in May, ahead of Kevin Warsh’s first rate-setting meeting as Federal Reserve chairman next week.

Traders expect the Fed to hold rates steady at 3.5% to 3.75%, but see a more than 50% chance of a hike by the end of the year. Prices eased slightly on Thursday after Trump’s comments on a potential deal.

Against the Swiss franc, the dollar strengthened 0.21% to 0.79680.

Among cryptocurrencies, Bitcoin gained 0.40% to $63,595.26. Ethereum fell 0.29% to $1,665.87.