By Chibuike Oguh
NEW YORK, June 12 (Reuters) – The dollar steadied on Friday but remained on track for a weekly loss as markets monitored negotiations over a deal that could end the Middle East conflict.
Traders were also digesting unprecedented demand for shares of SpaceX, which raised $75 billion in an initial public offering and jumped about 20% in its Nasdaq debut.
The euro was little changed at $1.15725, hovering around a one-week high and poised for a weekly gain after the European Central Bank announced its first interest rate hike in three years on Thursday.
PEACE AGREEMENT
Leaked terms of a proposed memorandum to end the Gulf war, outlined by Western, Pakistani and Iranian sources on Friday, appeared to favor Iran, drawing criticism from US President Donald Trump, who called the reports inaccurate.
Trump’s announcement Thursday of a deal had sent Wall Street stocks higher, oil prices lower and the U.S. dollar lower.
Markets are taking a pause as they assess the prospects for peace and the impact of the SpaceX IPO, while investors watch whether funds will shift from stocks or cash, said John Velis, currency and macro strategist at BNY.
“The expected good news on the Middle East ceasefire had a big reaction overnight and I think we got there this morning and we have the SpaceX IPO and a bunch of central bank meetings next week,” Velis said.
The US dollar rose 0.18% against the Japanese currency to 160.225 yen, holding near a key level that often raises concerns about Tokyo intervention.
The pound was stable at $1.34145. Data showing the UK economy contracted in April had little impact, with markets focused on talks with Iran.
The US dollar index, which measures the dollar against a basket of six currencies, was steady at 99.75 after hitting a one-week low on Thursday.
Investors have tended to buy the dollar as a safe haven when tensions flare in the Iran war and sell it in favor of riskier assets, such as stocks, when peace talks appear to be moving forward.
FED IN SIGHT
Data on Thursday showed U.S. producer prices rose more than expected in May, ahead of Kevin Warsh’s first rate-setting meeting as Federal Reserve chairman next week.
Traders expect the Federal Reserve to keep rates steady between 3.5% and 3.75%, but see a more than 50% chance of an increase by the end of the year. Prices fell slightly on Thursday after Trump’s comments about a possible deal.
Against the Swiss franc, the dollar strengthened 0.21% to 0.79680.
In cryptocurrencies, bitcoin gained 0.40% to $63,595.26. Ethereum fell 0.29% to $1,665.87.
(Reporting by Chibuike Oguh in New York; Editing by Mark Potter and Edmund Klamann)