The euro edged higher against the dollar in New York foreign exchange trading on the 25th, closing at $1.1675, up roughly $0.0011 from the previous session’s New York close of $1.1664. Growing expectations that negotiations toward a U.S.-Iran ceasefire were making progress sent WTI crude oil futures down more than 3%, tilting the market toward euro buying and dollar selling.
The decline in the benchmark U.S. 10-year Treasury yield to the 4.61% range also encouraged dollar selling, with EUR/USD touching a session high of $1.1680 shortly after 5:00 a.m. However, the pair failed to break above the previous day’s high of $1.1687, and the highs of $1.1711 reached on the 20th and 21st continued to act as resistance.
Dollar-yen extended modest gains, closing at ¥159.19, up roughly 8 sen from the previous session’s New York close of ¥159.11. As excessive concerns over the Middle East situation receded, falling oil prices and lower U.S. long-term yields weighed on the pair, with dollar-yen briefly dipping to around ¥159.09 just before 5:00 a.m. However, the session low of ¥159.05 set during Oceania hours served as near-term support, limiting downside.
Within New York hours, dollar-yen traded in a narrow range in the low ¥159 zone throughout the session. With the July U.S. Personal Consumption Expenditures (PCE) deflator due on the 26th and Fed Chair Warsh’s speech at the Jackson Hole Symposium scheduled for the 28th, a wait-and-see mood prevailed.
Euro-yen rebounded after three sessions of declines, closing at ¥185.84, up roughly 27 sen from the previous session’s New York close of ¥185.57. The pair dipped to around ¥185.66 shortly after 9:00 p.m. before recovering to near ¥185.93 after 2:00 a.m. Buying followed the euro’s rise against the dollar, while gains in U.S. equities also provided support.
Reference ranges for the day were as follows:
| Currency Pair | Low | High |
|---|---|---|
| Dollar-yen | ¥159.05 | ¥159.49 |
| EUR/USD | $1.1651 | $1.1680 |
| Euro-yen | ¥185.51 | ¥185.95 |
U.S. Economic Indicators Broadly Miss Expectations
U.S. economic data released on the day was generally soft, reinforcing dollar selling. The August Consumer Confidence Index came in at 89.4, below the market forecast of 90.2 and unchanged from the prior month’s 90.2. July New Home Sales totaled 607,000 units, below the expected 620,000 and a sharp decline from June’s 678,000.
The June FHFA House Price Index was flat month-over-month at 0%, missing the expected +0.2%. Meanwhile, the June S&P CoreLogic Case-Shiller 20-City Home Price Index rose 2.1% year-over-year, exceeding the forecast of +1.80%. The August Richmond Fed Manufacturing Index came in at 4, below the expected 7 and down from July’s 5. The August Philadelphia Fed Non-Manufacturing Activity plunged to -10.6, far below the forecast of 3.6 and a sharp deterioration from July’s 7.4.
Boston Fed President Collins stated that “prompt tightening would be appropriate” if inflation deceleration cannot be confirmed, putting a partial brake on the dollar-selling trend.
Iran Sanctions and Plunging Oil Prices Drive Market
U.S. Treasury Secretary Bessent announced expanded economic sanctions against Iran on the 24th, but with no specific country names announced as sanction targets in New York trading on the 25th, and reports that mediator countries were continuing work toward a peace agreement, oil prices extended their decline. In the previous day’s Tokyo session, Pakistan’s Interior Minister Naqvi was reported as saying “significant progress” had been made in peace talks with Iran, easing concerns over Middle East supply disruptions.
GBP/USD fell to $1.3626 before rising to $1.3655. Dollar-Swiss franc rose to 0.8031 francs before falling to 0.8008 francs.
Market attention has now shifted to the July PCE deflator on the 26th and Fed Chair Warsh’s speech on the 28th. With strong interest in gauging the future direction of monetary policy from his first Jackson Hole address since becoming Fed Chair, traders refrained from aggressive positioning.
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