Dollar steadies as traders weigh prospects for Iran ceasefire

The U.S. dollar was up 0.1% against Japan's currency at 160 yen, keeping it around a key level at which traders tend to get nervous about intervention from Tokyo, Reuters reported.

The British pound ​fell very slightly to $1.341. Data showing the economy contracted in April appeared to have little impact, with the ​focus on Iran talks.

U.S. President Donald Trump said on Thursday the United States and Iran could ⁠sign a peace deal as soon as this weekend that would reopen the Strait of Hormuz to shipping. ​Brent crude slid 3.6% to $87 a barrel on Friday.

Iran's semi-official Mehr news agency said on Friday the memorandum, which contained U.S. ​commitments to lifting sanctions and its naval blockade, required finalisation by the relevant authorities.

Yet analysts and investors sounded a skeptical note, saying potential breakthroughs have previously failed to materialise.

"There's a question around the hopes of a deal, and questions around whether it will be met and ​agreed upon by Iran and the United States," said Michael Wan, senior currency analyst at Mitsubishi UFJ Financial Group ​in Singapore.

"It sounds like it's quite close, but they're not exactly at the finish line."

The U.S. dollar index , which measures the greenback's ‌strength ⁠against a basket of six currencies, was flat at 99.68 after slumping to its weakest in a week on Thursday.

Investors have flocked to the safe-haven dollar when tension in the Iran war has flared, and sold it to buy stocks when peace talks have appeared to make progress.

"For today, the market will again be headline-driven. Will Vice President JD Vance ​be getting on a plane ​to Europe to sign ⁠some kind of agreement?" asked Chris Turner, global head of markets at ING.

And more importantly, will we receive confirmation from Iran that it is happy with a deal and will ​also be sending a delegation to Europe this weekend? Expect the dollar to be ​bounced around."

Data on ⁠Thursday showed U.S. producer prices increased more than expected in May, ahead of Kevin Warsh's first rate-setting meeting as chair of the Federal Reserve next week.

Traders expect the Fed to keep rates steady at 3.5% to 3.75%but see a more than 50% ⁠chance that ​it raises them by the end of the year, with pricing ​pulled slightly lower on Thursday by Trump's comments about a potential deal.

In cryptocurrencies, bitcoin was up 0.1% at $63,430 but down 13% for the month so ​far.