Dollar stumbles as optimism from fragile Israel-Iran truce lingers
Markets were jubilant and an index of global shares hit a record high overnight as a shaky ceasefire brokered by U.S. President Donald Trump took hold between Iran and Israel.
The two nations signalled that the air war between them had ended, at least for now, after Trump publicly scolded them for violating a ceasefire he announced.
Investors heavily sold the dollar in the wake of the news, after pouring into the safe-haven currency during the 12 days of war between Israel and Iran that also saw the U.S. attack Iran's uranium-enrichment facilities.
Currency moves were more subdued in early Asia trade on Wednesday though the euro remained perched near its highest since October 2021 at $1.1621, having hit that milestone in the previous session.
Sterling eased 0.02% to $1.3615 but was similarly not far from Tuesday's peak of $1.3648, which marked its strongest level since January 2022.
The risk-sensitive Australian dollar , which rallied sharply in the previous session, last traded 0.02% higher at $0.6492.
While the truce between Israel and Iran appeared fragile, investors for now seemed to welcome any reprieve.
"The market is complacent about some of the downside risks," said Joseph Capurso, head of international and sustainable economics at Commonwealth Bank of Australia.
"The thing I get is this issue is not over, which means it could come back to be a driver of commodity prices and currency markets again."
In other currencies, the New Zealand dollar rose 0.13% to $0.6015, while the yen steadied at 144.96 per dollar.
Some Bank of Japan policymakers called for keeping interest rates steady for the time being due to uncertainty over the impact of U.S. tariffs on Japan's economy, a summary of opinions at the bank's June policy meeting showed on Wednesday.
The Swiss franc , which scaled a 10-1/2-year high on Tuesday, steadied at 0.8049 per dollar.
Against a basket of currencies, the dollar eased slightly to 97.91.
While Federal Reserve Chair Jerome Powell stuck to his cautious approach and reiterated that the central bank was in no rush to ease rates at his semi-annual testimony to Congress on Tuesday, markets continue to price in a roughly 18% chance that the Fed could cut in July, according to the CME FedWatch tool.
"We think economic growth is slowing and the improvement in services and shelter inflation will push back against tariff rises, allowing cuts to resume in September," ANZ analysts said in a note.
A raft of weaker-than-expected U.S. economic data in recent weeks have bolstered expectations of Fed cuts this year, with futures pointing to nearly 60 basis points worth of easing by December.
Data on Tuesday showed U.S. consumer confidence unexpectedly deteriorated in June as households grew increasingly worried about job availability, another indication that labour market conditions were softening.
The two-year U.S. Treasury yield , which typically reflects near-term rate expectations, fell to a 1-1/2-month low of 3.7870% on Wednesday.
The benchmark 10-year yield was little changed at 4.3043%.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Daily Mail
2 hours ago
- Daily Mail
HAMISH MCRAE: Behind the scenes in the US, there are lots of reasons for concern
It's party time in America. Thursday saw Donald Trump get his 'big, beautiful' budget bill through Congress. The economy is still thumping out more jobs, another 147,000 in June. That helped share prices hit yet another all-time high, with the S&P 500 index now up 7 per cent this year. The chip-maker Nvidia pushed towards $4 trillion in value, making it worth more than all the companies on the London Stock Exchange put together. And then on Friday it was the Independence Day holiday, not something we particularly celebrate in the UK, but I was glad to be watching the fireworks on a beach in Florida – the state that thanks to Trump and his Mar-a-Largo resort, can now make a decent pitch to have become the place where it all happens. It's certainly a long way from that miserable news from Blighty about soaring Government borrowing costs, a tearful Chancellor and the prospect of more swingeing tax rises in her Autumn Budget. And yet, and yet. Behind the scenes, there are lots of reasons for concern. Start with trade. Next Wednesday is the deadline for countries to agree trade deals or be hit by much higher tariffs. The timing is absurdly tight, and Trump has said that countries where there is no agreement will get letters imposing tariffs of 20 to 30 per cent. This matters for Europe, which unlike the UK doesn't yet have even a basic agreement on future levies. The markets in the US seem to think it will all be sorted: another case of the TACO trade, Trump Always Chickens Out. They have been encouraged by the fact that, so far, tariffs that have been imposed have not led to a significant increase in inflation. In theory, that's bound to happen, but in practice importers seem to be shouldering the burden by cutting their margins. You can only do that for a while. Then there's the budget. In the UK, we are profoundly concerned about maintaining our credibility in the markets, and rightly so. In the US, they don't seem to care, and at the moment can get away with it. The budget, with tax cuts for the better-off and some small trimming of outlays, will inevitably increase the fiscal deficit. I'm always suspicious of precise calculations about the impact of tax changes, and the overall effect may turn out to be quite modest. But the truth is that the US government plans to borrow around 6 per cent of gross domestic product for years to come. Some of that money has to come from abroad, with foreigners currently owning about 30 per cent of the national debt. So far, they have been prepared to do so, but the mood could shift. The main sign of such a change in attitude towards investment in US government securities has come in the exchange rate. So far this year, the dollar has fallen at the fastest rate since 1973. It is down more than 10 per cent on its trade-weighted average, and the lowest it has been for three years. You can soften the story a bit by pointing out that it was overvalued then, and it probably still is. As argued here last week, thanks to further dollar weakness, I expect the pound to go to $1.50. To be clear, this is not a panic run on the dollar; more a sensible reassessment of what it ought to be worth. But coming on top of the tariffs, a weaker currency will push up prices, and like the rest of us, Americans are feeling pretty battered by inflation. There's another warning signal: the housing market. It's gone soft. Prices are steady, nationally up just 0.6 per cent on a year ago. But the number of sales is down by 5 per cent, and there are 16 per cent fewer homes on offer. It's such a huge country that it's hard to generalise, but there is a feeling that the market has shifted from boom to stagnation, and in some areas, notably here in Florida, there's a slump. So there are cracks in the feet of the US giant. But let's not kid ourselves. The rest of the world does not seem important from this side of the Atlantic. The money is here. New York dominates global finance, and as far as equities are concerned, it has utterly squashed London. It has been a humiliating week for the UK and rather a triumphant one for the US.
Reuters
3 hours ago
- Reuters
BRICS agree to joint statement ahead of Rio leaders summit
RIO DE JANEIRO, July 5 (Reuters) - Diplomats from the BRICS group of developing nations have agreed on a joint declaration of their leaders at a summit in Rio de Janeiro this week, three people familiar with the talks said on Saturday. The shared statement, which a gathering of their foreign ministers failed to achieve in April, underscores the group's commitment to consensus despite its quickly expanding ranks. The group of major emerging economies expanded last year beyond Brazil, Russia, India, China and South Africa to include Egypt, Ethiopia, Indonesia, Iran, Saudi Arabia and the United Arab Emirates. That has added diplomatic weight to the gathering, which aspires to speak for developing nations in the Global South, but also increased the complexity of reaching common terms on contentious geopolitical issues. Negotiators preparing for the leaders summit over the past week had struggled to find shared language about the bombardment of Gaza, the Israel-Iran conflict and Africa's representative in a proposed reform of the United Nations Security Council, said two of the sources, who requested anonymity to speak openly. To overcome differences among African nations on the continent's Security Council representative, the group agreed to endorse seats for Brazil and India, while leaving open which country should represent Africa's interests, a person familiar with the talks said. The source said the group had agreed to sharpen its tone on conflicts in the Middle East, strengthening language beyond an April note expressing "serious concern." On trade, sources said the BRICS will continue their thinly veiled criticism of U.S. tariff policy under President Donald Trump from the April ministerial meeting, where they warned against "unjustified unilateral protectionist measures, including the indiscriminate increase of reciprocal tariffs."
Daily Mail
4 hours ago
- Daily Mail
Trump backlash as rich Americans flee the States and bid for new life... in a Scottish castle
Wealthy Americans fleeing the US after the election of Donald Trump are driving a boom in sales of Scottish castles. In the six months since the most controversial and divisive president in modern history took office, top-end estate agents have witnessed a huge surge in interest for the country's oldest and most dramatic properties. And although buying a castle has long been the ultimate fantasy of many home-owners, prices are now soaring to a historic high – partly because of an exodus of millionaires from the States. So while many castles over the centuries have witnessed and withstood countless battles, skirmishes and attacks, these days they are more likely to find themselves at the centre of a bidding war. One recent sale went to a closing date with no fewer than three rich Americans all offering far in excess of the initial asking price. Cameron Ewer, head of residential property for Savills estate agency explained a spike in interest from the US was pushing prices higher. He said: 'There are definitely more international buyers in the marketplace. In the immediate aftermath of Donald Trump 's election, the number of American inquiries through our website went absolutely through the roof – and has now settled to a far higher-than-normal level. 'Not everyone is a Trump supporter, and those that aren't are keen to leave the country: there's definitely an element of that in discussions we've had with buyers.' Last month tax lawyers and immigration advisers told US broadcaster CNN they had seen a 'stampede' of Americans emigrating since the start of Mr Trump's presidency. One couple told the channel: 'We're getting away from the chaos … I feel like the America as we knew it growing up is slipping away pretty fast.' Meanwhile, more than 1,900 US residents applied for a British passport during the first quarter of 2025, the most since the Home Office began keeping records in 2004. Politics aside, Mr Ewer said there were also other factors behind the surge in interest in Scotland's castles. He said: 'Scottish castles have always had international appeal. There's a romance surrounding them – and there's always a smattering on the market. But there are definitely more for sale right now. One factor may be the increasing costs of running a castle – which isn't cheap. Another factor is simply that the market in Scotland is pretty buoyant across the board, and with more stock coming to the market generally, there's a feeling that this is a good time to be selling prize assets in Scotland.' He explained: 'The overarching reason for the uptick in interest is value: the quality of the properties, the culture, the heritage behind them that buyers can afford in Scotland is head and shoulders above what can be found in other places in the UK, Europe or elsewhere.' And with a flurry of castles newly offered to the market, even properties worth millions are being quickly snapped up. In just the past few weeks, three magnificent piles have gone 'under offer' – including Plane Castle in Stirlingshire (a manor house near Bannockburn with a 14th-century tower which was marketed for offers over £1.2 million); Keillour Castle (a turreted country house in Perthshire, offers over £1.8 million) and Cramond Tower (a restored mediaeval tower house outside Edinburgh, offers over £850,000). Glenborrodale Castle, a sprawling 16-bedroom sandstone castle in the West Highlands also sold this year – for more than £200,000 above the asking price – having been put on the market for offers over £2.35 million. Scotland has around 1,500 castles – ranging from mediaeval strongholds with towers and keeps, to fortified mansions, and even 18th century estate houses whose battlements are purely decorative. Many are ruins, while others have been converted into commercial ventures such as luxury hotels and wedding venues. Hundreds more, however, remain as private homes – and are eagerly sought after when they go up for sale, sometimes after decades or even centuries in the ownership of the same family. Estate agents believe the general level of interest in castles from property lovers on both sides of the Atlantic has been boosted by TV's The Traitors – hosted in the UK by Claudia Winkleman and by Alan Cumming in the American version – which was set amid the baronial splendour of Ardross Castle north of Inverness. Mr Ewer said increased demand was boosting the prices for castles. He said: 'Prices this year are at a height – both in terms of asking prices and also in terms of the final prices being achieved. Castles are a special type of property, and the values don't always follow trends in the general housing market. 'People don't say, 'I've got a budget of two million, I'm going to buy a Scottish castle.' They typically need far deeper pockets than that, to be able to ensure they can afford the maintenance and running costs. These aren't buyers with specific budgets. If you find the right buyer, they'll pay whatever it takes.' Earlier this month American actress Christina Hendricks hinted she was looking to buy a castle. After spending time in Scotland filming two series of period drama The Buccaneers – which features as locations Culzean Castle in Ayrshire, Hopetoun House, near South Queensferry, and Drumlanrig Castle in Dumfriesshire – the 50-year-old confessed in an interview: 'I am so in love with Scotland... I'm all about the historical stuff. I mean when we shoot at these estates and these castles... this is mind blowing to me.' Above, to help the actress – and any other would-be purchasers – track down a dream castle in Scotland, the Mail on Sunday reveals some of the most amazing examples currently on the market. Picturesque ruins Over the centuries, many ancient castles have fallen into disrepair. And although the damage may be beyond the reach of even the most ambitious restorer, the remains can still make a picturesque centrepiece for a larger estate. The ruins of Castle Cary in Creetown, Dumfries and Galloway, are currently on the market for offers over £9.5 million. The price tag may seem high for a derelict building but the estate also includes a holiday park business with swimming pool, and pub and restaurant. On the Isle of Skye, the ruins of Armadale Castle, the historic seat of the MacDonalds of Sleat, (above) is on sale at offers over £995,000. The Clan Donald Lands Trust said it had taken the 'difficult' decision to sell the square Tudor-Gothic mock-castle dating back to 1815 – and the adjoining 20,000-acre estate – because of financial challenges. Castle with Mod Cons Although Pirwindy Keep near Largo in Fife looks and sounds like a historic stronghold, it was actually built in 1998. To all intents and purposes it really is a 'modern' castle. The six-bed property – offers over £1.9 million – was designed as a replica of a fortified turreted keep. The main three-storey tower has an imposing stone façade and a protruding balcony which offers great views over the Firth of Forth to Edinburgh's Arthur's Seat – ideal as a lookout in case the house ever needs to take on a defensive role against marauding invaders! Historical dungeons! For some, a castle's true worth can only be measured in the number of centuries it has been standing – and in the tally of original features such as mediaeval battlements, dungeons, moats and arrow-slit windows. Earlshall Castle in Leuchars, Fife, still retains its 16th century musket loops for repelling invaders. With an asking price of £8 million, the house – which was visited by Mary, Queen of Scots and King James VI – also boasts a Great Hall and a 50ft gallery decorated with the coats of arms of European royalty and Scottish nobles. Cakemuir Castle in Tynehead, Midlothian, (above) also dates back to the 1500s and has distinctive crenellated walls and spiral staircases, plus a stone plaque commemorating the occasion Mary, Queen of Scots in 1567 sheltered there, as she fled Borthwick Castle disguised as a page boy. The eight-bedroom restored tower house is available for offers over £2.9 million. The original tower house features a projecting turnpikestair, gun loops and a parapet for guards. A pavilion contains a dining room opening to the lawned garden through three sets of French doors. The property also has a wine cellar. A £300,000 bargain Believed to be the cheapest castle currently on the market in Scotland, Little Tarrel Castle is for sale, offers over £299,000. The B-listed fortalice – a small fortified house – was built in 1559 by Alexander Ross who became chief of Clan Ross and Laird of Balnagown after his father was murdered. Determined not to meet the same fate, Alexander began attacking rivals, kidnapping neighbours, stealing church lands and defying the government. After decades of delinquent behaviour, he was brought to book and forced to hand his title to his son. The castle was fully restored in the 1980s but retains many original features, including arched stone fireplace, timber beams, thick wooden latched doors and shutters, as well as the original shot hole, gun loops and arrow slits.
