Dollar firms as investors monitor US-Iran talks; yen nears 40-year low

By Amanda Cooper

LONDON, June 22 (Reuters) - The dollar was dependable connected Monday arsenic the archetypal circular of U.S.-Iran talks fuelled capitalist optimism for a deal, portion the yen inched towards 40-year lows, keeping traders connected borderline implicit ‌possible involution from Tokyo.

A associated connection from mediating nations Qatar and Pakistan said the U.S. and Iran agreed to a ‌roadmap towards a last woody to extremity their struggle wrong 60 days. But talks were tense arsenic investors fretted astir threats from U.S. President Donald Trump to restart ​the warfare successful the Middle East and Tehran's announcement it had closed the captious Strait of Hormuz.

Oil prices were down 1%, leaving Brent crude futures astatine $79.8 a barrel. [O/R]

"The carnal marketplace remains choky and that should supply immoderate support, but flows successful FX and commodities volition proceed to beryllium heavy influenced by developments successful the vigor complex," said Chris Weston, caput of probe astatine Pepperstone.

Sterling fell 0.3% to $1.32, arsenic British Prime Minister ‌Keir Starmer said helium was considering his governmental ⁠future aft rival Andy Burnham's decisive parliamentary by-election victory.

"Current signals suggest Burnham would adhere to the existing fiscal framework, though transportation volition substance much than guidance," they said successful a note.

YEN NEAR 40-YEAR LOW

The ⁠euro was down 0.27% astatine $1.1443, portion the Japanese yen remained successful the spotlight, softening to 161.66 per dollar, conscionable shy of a two-year debased reached past week. A interruption beyond 161.96 would instrumentality the yen to its weakest level since 1986.

Japanese Finance Minister Satsuki Katayama said connected Monday that ​authorities were ​prepared to respond appropriately to currency moves astatine immoderate time.

"The MOF whitethorn ​be getting sore necks watching USD/JPY surge into the ‌2024 high," said Matt Simpson, elder marketplace expert astatine StoneX. "Yet they whitethorn besides consciousness powerless to bash thing astir it — arsenic intervening against the tide of a hawkish Fed and beardown U.S. fundamentals could beryllium costly and futile."

The yen has erased gains made aft a circular of interventions from April 30, erstwhile Tokyo spent a grounds 11.7 trillion yen ($72.44 billion), arsenic a hawkish tilt by the Federal Reserve has led traders to ramp up bets connected complaint increases this year.

CIBC caput of G10 currency strategy Jeremy Stretch said adjacent if ‌the BOJ raises rates much quickly, the information that traders present spot ​the Fed arsenic apt to rise U.S. rates astatine slightest erstwhile this twelvemonth ​means the dollar is apt to stay firm.

"It's inactive the ​case that complaint spreads are not peculiarly favourable, and if you're successful a satellite wherever U.S. exceptionalism is ‌still the watch-word, past the way of slightest resistance, ​outside of immoderate involution risk, would ​be for dollar/yen (to trade) higher," helium said.