The US dollar fell as signs emerged that the prolonged US-Iran deadlock could ease, with potential negotiations resuming. Concurrently, the US Department of Justice announced it would end its investigation into the Federal Reserve, a move that may pave the way for Kevin Warsh, nominated by former President Trump, to become Fed chair and potentially advance interest rate cuts.
The Bloomberg Dollar Spot Index dropped 0.2% on Friday, narrowing its weekly gain to 0.3%.
Over the weekend, market participants will closely monitor developments in the Middle East to see whether the current "no war, no peace" situation will shift in either direction.
Data from the US Commodity Futures Trading Commission showed that non-commercial investors, including hedge funds and asset managers, reduced their bullish dollar positions for the second consecutive week ending April 21. Their net long positions decreased from $14.6 billion the previous week to approximately $11.6 billion.
There remains a significant gap in the negotiating stances of the US and Iran, and there are strong reasons to remain skeptical about the likelihood of an agreement being reached.
Next week, central banks in Japan, the US, Canada, the eurozone, and the UK will announce their interest rate decisions.
The New Zealand dollar rose 0.5% against the US dollar to 0.5881.
The US dollar fell 0.2% against the Japanese yen to 159.42. Japanese Finance Minister Tsuyoshi Kato stated that authorities will take "resolute and forceful" action against speculative currency fluctuations, highlighting significant speculative activity in the foreign exchange market, partly linked to oil prices.
The euro rose 0.3% against the US dollar to 1.1716.
The British pound climbed 0.5% against the US dollar to 1.3530.
Strong UK economic data have increased the likelihood of a Bank of England rate hike, making the pound an attractive option for carry trades and potentially outperforming lower-yielding currencies.
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