On the policy front, Federal Reserve nominee Kevin Warsh’s comments at a Senate confirmation hearing were interpreted as slightly hawkish, while strong retail sales data provided an upbeat view on the strength of the American economy.
The U.S. dollar index, which measures the greenback’s strength against a basket of six currencies, was steady at 98.415, its highest level since April 13.
“There was a modest risk-off tone overnight amid renewed uncertainty around U.S.-Iran peace talks,” analysts from Westpac wrote in a research report.
Most other currencies were unchanged after the ceasefire extension. The euro was steady at $1.1739 and was up 0.1% at $1.3519. The Australian dollar was little changed at $0.7152 while the New Zealand dollar held steady at $0.5894.
Against the yen, the U.S. dollar nudged down 0.1% to 159.26 yen as data earlier showed Japan’s exports rose for a seventh straight month, defying any major impact from disruptions caused by the Gulf conflict.
The market is troubled by divisions between the hardline Islamic Revolutionary Guard Corps and more moderate factions within the Iranian government, said Tony Sycamore, market analyst at IG in Sydney. “Make no mistake, this internal power struggle remains the single biggest obstacle to any lasting deal, and how it resolves remains to be seen,” he said.
Separately, Trump said on Tuesday he will “remember” companies that do not seek refunds for payments they made on his tariffs that were deemed illegal by the Supreme Court, although he did not specify how companies might benefit by abstaining from the U.S. government’s new refund portal.
U.S. retail sales increased 1.7% in March, more than the expected 1.4% rise as the war with Iran boosted gasoline prices and led to a record surge in receipts at service stations, while tax refunds underpinned spending elsewhere.
REGIME CHANGE AT THE FED
In Washington, Warsh said on Tuesday he had made no promises to Trump about cutting interest rates, as he tried to assure U.S. senators mulling his confirmation to lead the U.S. central bank that he would act independently of the White House while pursuing broad reforms.
“The most interesting points were probably that he emphasized the Fed’s independence and clearly rejected any request from President Trump to cut rates; taken together, the overall tone could be described as slightly hawkish,” said Junya Tanase, chief Japan FX strategist at JPMorgan Chase & Co in Tokyo.
“That said, since OIS pricing barely moved even after Warsh’s remarks, yesterday’s rise in U.S. yields and the USD’s strength were likely driven mainly by higher oil prices on Iran-related news, suggesting Warsh’s impact was limited.”
Republican Senator Thom Tillis used his time during the hearing to detail why he would delay the confirmation until the Trump administration drops an ongoing criminal probe of current Fed Chair Jerome Powell.
In cryptocurrencies, bitcoin was up 0.2% at $75,894.67, while ether nudged up by the same magnitude to $2,321.92.
