Most Asian currencies kept to a tight range on Wednesday, while the dollar steadied as markets remained uncertain over future U.S.-Iran peace talks after Washington indefinitely extended a ceasefire.
Regional currencies were also pressured by some overnight strength in the dollar, after U.S. President Donald Trump’s nominee for the Federal Reserve Chair, Kevin Warsh, said he made no commitments to cut interest rates.
Market focus remained squarely on how the Iran conflict will play out, with the status of peace talks remaining uncertain after Trump extended the ceasefire, but maintained a naval blockade against Iran.
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Dollar steadies after Warsh comments The dollar index and dollar index futures moved little in Asian trade, steadying after logging some gains on Tuesday.
The greenback was supported by Warsh stating he made no promises to Trump that he would cut interest rates, while also emphasizing on the central bank’s independence from politics.
Speaking before the Senate Banking Committee, Warsh said he would engage in a major policy overhaul at the Fed if confirmed as its Chair.
While Warsh is likely to be confirmed, the timing of any Senate approval remains unclear, especially as top Republican lawmakers signaled they would delay his confirmation until the Trump administration drops an ongoing criminal probe of current Fed Chair Jerome Powell.
Trump has repeatedly demanded that the Fed cut interest rates, and even told CNBC on Tuesday, prior to Warsh’s hearing, that he would be disappointed if it didn’t happen.
The criminal probe against Powell was viewed by many as an attempt to coerce the central bank.
Asia FX muted as Iran uncertainty persists Asian currencies moved in a tight range as uncertainty over more U.S.-Iran peace talks kept traders to the sidelines.
While the ceasefire extension does present some potential for de-escalation, the status of more peace talks remain unclear, especially after U.S. and Iranian delegates pulled out from a planned meeting in Pakistan on Tuesday.
Trump said the U.S. naval blockade against Iran remained in place, and that the Strait of Hormuz will remain closed. The latter presents risks to energy markets and inflation.
The Japanese yen’s USD/JPY pair was flat after data showed the country’s exports grew for a seventh consecutive month, with the Middle East war so far causing limited impact.
The South Korean won was an outlier, with the USD/KRW pair falling 0.4% after producer price index data showed a sharp increase in March– a trend that could elicit more hawkish moves from the Bank of Korea.
The Australian dollar’s AUD/USD pair fell 0.1%, while the Singapore dollar’s USD/SGD pair was flat. The Chinese yuan’s USD/CNY pair also moved little.
