Dollar weakens, Asia FX firms on US-Iran peace hopes

Investing.com-- The dollar softened on Monday, while Asian currencies strengthened as encouraging comments on a potential U.S.-Iran peace deal helped spruce up risk appetite. Trading volumes were muted on account of holidays in the U.S., Hong Kong, and South Korea. But market sentiment improved after reports over the weekend flagged some progress towards a U.S.-Iran peace deal, with oil prices falling sharply on Monday. Get more forex market cues by subscribing to InvestingPro Dollar cools as Trump flags some progress towards US-Iran deal The dollar index and dollar index futures fell 0.2% apiece on Monday, retreating after logging some gains last week. U.S. President Donald Trump said over the weekend that the U.S. and Iran had “largely negotiated” a framework agreement to end their conflict and reopen the Strait of Hormuz. Separate reports showed Iran and Pakistani mediators also flagging progress in talks. But Trump later said he was in no rush to finalize a deal. Iran also largely rejected U.S. demands to hand over its enriched uranium holdings. Despite the mixed signals, markets still cheered a potential end to the Iran war, sending oil prices sharply lower. This weighed on the dollar, as markets priced out expectations of prolonged energy-fueled inflation that could drive up interest rates later in the year. Asia FX firms, Indian rupee supported by hawkish RBI talk Asian currencies broadly firmed on Monday, benefiting from weakness in the dollar and oil prices.