Dollar pulls back as US-Iran attacks pause, oil drops

SINGAPORE: The dollar slumped against its major peers at the start of Asian trading on Monday after the US paused ​its bombing campaign in Iran during the weekend, prompting a drop ‌in oil prices and boosting global investor confidence.

Against the yen , the US dollar was down 0.2% at 163.585 yen, its biggest decline since July 10.

The euro was ​up 0.2% at $1.1397, while the British pound rose by a similar ​magnitude to $1.3353.

Oil prices sank in early Asian trade, with Brent crude tumbling ⁠4.7% to $92.19 after the U.S. military temporarily halted its two-week long strikes.

Iran ​will halt its own attacks as long as the U.S. does the same, ​a senior Iranian official told Reuters on Sunday, following a China-led push to resume stalled diplomatic efforts in Pakistan to end the war.

“Market sentiment was supported by reports that Pakistan ​and Iran were exploring new peace talks with the US and that ​oil exports from the Middle East continued to flow”, Westpac analysts wrote in a research ‌report.

“Over ⁠the weekend, the US paused strikes against Iran as tensions in the region continued to escalate.”

In other major currencies, the New Zealand dollar was 0.3% higher at $0.5802, while its Australian counterpart climbed 0.2% to $0.6997.

The dollar index, which ​measures the greenback against ​a basket of ⁠six currencies, slipped 0.25% to 101.23 at the start of a week packed with central bank meetings, including that ​of the Federal Reserve.

Traders have increased their bets that ​the Federal ⁠Reserve could raise interest rates at its upcoming policy meeting, although the overall odds are little changed from Friday.

Fed funds futures are pricing an implied 36.3% ⁠probability ​of a 25-basis-point hike at the next two-day ​meeting ending on Wednesday, according to the CME Group’s FedWatch tool.

In cryptocurrencies, bitcoin was up 0.9% ​at $65,193.62 while ether climbed 1.9% to $1,948.00.