Dollar holds gains as markets focus on peace talks, Fed minutes

TOKYO – The dollar held its ground on Wednesday as geopolitical risks kept markets on edge and investors awaited minutes from the Federal Reserve for signals on future rate cuts.

The yen was steady after data showing a rebound in Japanese manufacturer sentiment and President Donald Trump announced the first tranche of mega-investments Tokyo is making in the US The kiwi held gains before a decision by the Reserve Bank of New Zealand, which is widely expected to hold on rates.

Iran said progress had been made in nuclear talks with the US in Geneva, while peace negotiations between Ukraine and Russia continued. With many markets in Asia remaining closed for Lunar New Year holidays, investor focus remained on the Fed’s readout of its last meeting and key US economic data due on Friday.

“Weaker risk sentiment, because of concerns around renewed geopolitical tensions in the Middle East and volatility in US equity markets, briefly supported the USD,” Samara Hammoud, a currency strategist at Commonwealth Bank of Australia, wrote in a note. “However, reports that the US and Iran made progress and reached a ‘general agreement’ during nuclear negotiations in Switzerland helped ease those concerns.”

The dollar index, which measures the greenback against a basket of currencies, was little changed at 97.11 after a two-day advance. The euro EUR= was steady at USD 1.1852.

The yen strengthened 0.1% to 153.12 per dollar. Sterling held at USD 1.3563, after a 0.5% slide in the previous session.

Iran and the US reached an understanding on the main “guiding principles” in a second round of indirect talks over their nuclear dispute on Tuesday, although a deal is not imminent, Iranian Foreign Minister Abbas Araqchi said.

Elsewhere in Geneva, negotiators from Ukraine and Russia concluded the first of two days of US-mediated peace talks in Geneva, with Trump pressing Kyiv to act fast to reach a deal to end the four-year conflict.

The Fed’s Open Market Committee issues minutes from its January meeting later on Wednesday, while the Commerce Department on Friday will issue its first estimate for US gross domestic product for the fourth quarter.

In Japan, data showed exports rose for a fifth consecutive month in January, while the Reuters Tankan poll showed that confidence among the nation’s manufacturers improved in February for the first time in three months.

The International Monetary Fund urged Japan to keep raising interest rates and avoid loosening fiscal policy further. The Trump administration announced three projects valued at USD 36 billion to be financed by Japan, the first of some USD 550 billion in projects Tokyo agreed to undertake in order to lower US tariffs.

The Australian dollar was steady at USD 0.7083, while the kiwi traded little changed at USD 0.6047. New Zealand’s first female central bank chief Anna Breman chairs her debut meeting on Wednesday, with rates widely expected to stay on hold.

In cryptocurrencies, bitcoin fell 0.08% to USD 67,597.50, while ether declined 0.18% to USD 1,995.63.

(Reporting by Rocky Swift; Editing by Stephen Coates)