Dollar and gold hideout against declining tensions in the Middle East

The dollar index (DXY00) fell by -0.21% on Friday. Pressure came on Friday after Reuters reported that the Iranian government was ready to discuss restrictions on uranium enrichment levels. President Trump also said he was happy to give more time to diplomacy and would not decide to hit Iran for another two weeks.

Plus, Dovish’s comments from Fed Governor Waller on Friday were heavier in the dollar when he said, “I think there’s room for interest rates to be reduced as early as July, and we can see what happens with inflation.” The dollar remained a weaker decline in the Philadelphia Fed Business Outlook report than expected.

The Philadelphia Fed Business Outlook survey in June in the US was unchanged at -4.0.

The US key economic indicator index could fall for the sixth consecutive month, with a perfect fit for the forecast -0.1%m/m and a LEI decline.

The market is discounting 15% on the potential for a rate reduction of -25 bp at a rate of 15% after the FOMC meeting on July 29th-30th.

EUR/USD (^EURUSD) rose +0.30% on Friday. The euro rose on Friday due to the weakening of the dollar. But the euro profits were limited after the eurozone’s June consumer confidence index fell unexpectedly in June, and Germany’s May producer prices recorded the biggest drop in eight months.

The eurozone’s June consumer confidence index unexpectedly fell from -0.1 to -15.3, weaker than expected to increase to -14.9.

Germany’s May PPI fell to -1.2% y/y, along with the expected and biggest decline in 8 months.

The swap is discounting the 7% chance if the ECB cuts -25 bp rates at its policy meeting on July 24th.

USD/JPY (^usdjpy) rose +0.38% on Friday. The yen gave up on overnight profits and was three weeks lower than the dollar on Friday. Reuters reported that the Iranian government has said it is ready to discuss restrictions on uranium enrichment levels, and that President Trump is willing to wait two weeks to see if diplomacy works before attacking Iran.

The yen initially moved higher on Friday after Japan’s May CPI, excluding fresh food and energy, was the hawkish factor in the BOJ policy after the most anticipated rise in 16 months. Also, comments from BOJ Governor Ueda were positive for the yen when he said BOJ would raise benchmark interest rates if the economic outlook came true.