Dollar Hits 10-Day Low as Iran Deal Sends Oil Tumbling

The dollar index fell 0.31% to 99.492 on Monday, the weakest level since June 5. The catalyst: U.S. and Iranian officials said Sunday they had agreed on a framework to end their war, halt the blockade of Iran and reopen the Strait of Hormuz.

Brent crude futures dropped more than 4% to $83.82. The oil rout boosted demand for currencies tied to economic growth. The euro rose 0.35% to $1.1607. Sterling gained 0.3% to $1.3448. The Australian dollar climbed 0.5% to $0.7075. The kiwi was up 0.4% at $0.5854.

“I think we’ll see the dollar fall over the course of the next few sessions,” said Nick Twidale, chief market strategist at ATFX Global in Sydney. “We’ll probably see some of the risk currencies like Aussie and yen appreciate a little bit. I don’t think we’re going to see any huge moves.”

The catch, Twidale said, is how quickly the strait actually reopens. “It’s certainly going to be months rather than weeks” before oil flows normalize.

President Donald Trump told the New York Times on Sunday that if Iran failed to reach a final nuclear accord, he would restart military attacks or make the United States “the guardian of the Middle East” in return for 20% of the region’s revenues. That threat kept some traders cautious, even as the headline deal drove the initial risk-on move.

The Japanese yen weakened to 160.15 per dollar, hovering near the 160 level that traders see as a line for potential intervention. The Bank of Japan meets June 16 and is expected to raise interest rates to a 31-year high, undeterred by the temporary absence of its governor. The decision would align the BOJ with the European Central Bank, which delivered a hike last week.

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