Dollar Near 6-Week High Amid Iran Talk Uncertainty

The US dollar stayed close to a six-week high on Friday as investors reacted to mixed signals from Washington and Tehran over a possible peace agreement. Oil prices rebounded in Asian trading, with Brent crude rising above $105 per barrel, while spot gold slipped back towards $4,522 an ounce. The S&P 500 and Dow Jones closed modestly higher on Thursday, though Walmart fell sharply after issuing weaker profit guidance. In London, the FTSE 100 ended little changed as weak UK business data and pressure on consumer-facing stocks offset gains in utilities and miners.

Equities

The FTSE 100 closed 0.1% higher on Thursday at 10,443.47, while the FTSE 250 added 0.5%, as investors weighed weak UK economic data against hopes that diplomatic talks between the US and Iran could ease pressure on energy markets. Concerns about inflation and supply disruption remained in focus after Iran hardened its position on uranium stockpiles and control of the Strait of Hormuz.

London-listed automotive marketplace Auto Trader Group closed 8.8% lower on Thursday after reporting slower sales growth, making it one of the weakest performers on the FTSE 100. Medical products group Convatec fell nearly 5% after warning that margin pressure would weigh on profitability, dragging the wider medical equipment sector down 1.6%.

Utilities stocks led gains in London trading, while industrial metal miners and retailers also moved higher. The market reaction came despite fresh data showing British companies recorded their broadest decline in activity for more than a year and factory orders contracted at the fastest pace since September 2020. Investors also absorbed softer-than-expected UK inflation figures released earlier this week alongside a rise in unemployment.

On Wall Street, the S&P 500 rose 0.17% on Thursday to close at 7,445.72, while the Dow Jones Industrial Average gained 0.55% to a record closing high of 50,285.66. The Nasdaq Composite edged 0.09% higher after a volatile session tied to developments in US-Iran negotiations and shifting oil prices.

Shares in Walmart closed 7.3% lower after the retailer forecast second-quarter profit below expectations. Finance chief John David Rainey said high fuel prices were pressuring consumers and warned retail price inflation could rise further if costs remain elevated.

NVIDIA slipped 1.8% despite issuing a strong revenue forecast and unveiling an $80 billion share buyback programme, as investors took profits following a strong rally this year. In contrast, IBM jumped 12.4% after the Trump administration announced funding for quantum computing ventures linked to the company.

Quantum computing shares rallied sharply across US markets. D-Wave Quantum surged 33.4%, while Rigetti Computing gained 30.6% and GlobalFoundries climbed 14.9% by the close on Thursday.

Forex & Commodities

The US dollar held close to a six-week high early on Friday after another volatile session linked to uncertainty over negotiations between Washington and Tehran. The dollar index traded near 99.23 after reaching 99.52 on Thursday, its strongest level since early April, supported by stronger US economic data and persistent concerns over energy supplies through the Strait of Hormuz.

Sterling was little changed at $1.343 against the dollar in Asian trading on Friday, although the pound remained on course for a weekly gain after last week’s sharp decline linked to political uncertainty in Britain. The euro edged lower to $1.162, while the Japanese yen weakened to ¥159.1 per dollar despite recent intervention by Tokyo aimed at stabilising the currency.

The Australian dollar slipped to $0.7142 and the New Zealand dollar traded at $0.5875 as higher oil prices continued to pressure import-dependent economies across Asia-Pacific markets. Indonesia’s rupiah remained close to a record low at 17,710 per dollar after Jakarta introduced new rules requiring natural resource exporters to retain all export revenues in domestic banks from June.

Fresh US economic data released on Thursday showed weekly jobless claims fell and manufacturing activity climbed to a four-year high in May, reinforcing expectations that the Federal Reserve could keep interest rates elevated for longer. Markets are now pricing in a strong possibility of another US rate increase before the end of 2026.

Attention also turned to the Federal Reserve leadership after the White House confirmed that President Donald Trump will swear in Kevin Warsh as Fed chair on Friday. Richmond Fed President Thomas Barkin said businesses’ response to persistent inflation pressures would determine whether policymakers need to raise borrowing costs further.

Spot gold fell early on Friday to $4,522 per ounce as the stronger dollar reduced demand for bullion. Silver traded lower at $76.25 per ounce, while platinum slipped to $1,949 and palladium fell to $1,373.

Oil prices rose sharply in Asian trading on Friday as doubts persisted over the likelihood of a breakthrough in US-Iran peace talks. Brent crude climbed to $105.0 per barrel, while US West Texas Intermediate rose to $98.17, although both benchmarks remained on course for weekly declines after volatile trading through the week.