Download App

[Peace Agreement Hopes Waver, Dollar Stabilizes and Rebounds, Risk Assets Give Back Gains] ⑴ The dollar index stabilized at 99.08 on Tuesday, after falling 0.3% in the previous session, as market optimism regarding a peace agreement with Iran was dampened. New US attacks on Iranian targets and Secretary of State Rubio's statement that an agreement could "take several days" weakened market expectations for the imminent reopening of the Strait of Hormuz. ⑵ Oil prices fell below $100 a barrel on Monday, easing pressure on emerging market currencies and slightly improving risk sentiment, driven by the prospect of a peace agreement. However, Brent crude futures rebounded 1.5% to $97.76 a barrel on Tuesday, giving back some of the losses, following news of new US military action. ⑶ The euro fell slightly against the dollar to 1.163 on Tuesday, after rising 0.3% on Monday. The pound fell 0.2% against the dollar to 1.347, after rising 0.6% on Monday. The Australian dollar fell 0.2% against the dollar to 0.716, indicating a cooling of risk appetite. (4) The dollar rose 0.2% against the yen to 159.21, nearing the 160 level, a point that had previously sparked market concerns about potential intervention by Japanese authorities. Institutional sources indicated that Tokyo intervened near this level in late April to support the yen. (5) Saxo Bank's chief investment strategist stated that the market's optimistic pricing in progress on negotiations is reasonable, but the real test lies in whether oil tankers can move freely, whether insurance premiums can decrease, and whether energy flows can normalize. OCBC strategists pointed out that even if oil prices remain below $100 in the second half of 2026, there is still a lack of substantial reasons to be bearish on the dollar, as the resilience of US economic growth and AI-driven inflationary pressures allow the Federal Reserve to maintain a hawkish stance.