Forex Today: Risk flows command markets on US-Iran peace deal yet to be signed

Here is what you need to know on Monday, June 15:

Markets cheer news of the United States (US) and Iran reaching an agreement on a framework deal to end the war at the beginning of the week. Later in the session, the Federal Reserve (Fed) Bank of New York's Empire State Manufacturing Survey for June and May Industrial Production data will be featured in the US economic calendar. Later in the week, the Fed will announce monetary policy decisions.

US President Donald Trump said that the Strait of Hormuz will be reopened as part of the agreement. Iran's deputy foreign minister also confirmed the news on state TV, while the top military command called it a victory for Tehran. The full text of the deal is yet to be published and sides are expected to sign it on Friday. According to the CNN, the ceasefire that started on April 8 will be extended in time and scope, and sides will have another 60 days to continue talks.

In the meantime, Iran’s National Security Council said the US naval blockade will be lifted immediately and the war will end on all fronts, including Lebanon. Still, Lebanon’s National News Agency (NNA) reported that there was a number of Israeli attacks in different parts of southern Lebanon, even after the deal was announced.

The US Dollar (USD) Index opened with a bearish gap and was last seen losing about 0.3% on the day near 99.50. Reflecting the risk-positive market atmosphere, US stock index futures are up between 1% and 2% in the European morning on Monday. Finally, Crude Oil prices decline sharply, with the Barrel of West Texas Intermediate (WTI) losing about 5% on the day near $79.

EUR/USD gains traction on Monday and trades slightly above 1.1600, rising nearly 0.4% on a daily basis. European Central Bank (ECB) Governing Council member Martins Kazaks said earlier in the day that the central bank would be ready to raise interest rates, while warning of upside inflation risks despite the finalization of a deal between the US and Iran.

GBP/USD climbed to a fresh 10-day high above 1.3450 in the Asian session on Monday but retreated below this level by the European morning. The Bank of England (BoE) will conduct its monetary policy meeting later in the week.

USD/JPY trades in a narrow range at around 160.00 in the early European session on Monday. The Bank of Japan is expected to announce a 25 basis points rate hike in the Asian session on Tuesday.

AUD/USD stays in positive territory above 0.7050 in the European morning on Monday. The Reserve Bank of Australia (RBA) is seen holding policy settings unchanged after the June meeting.

Gold (XAU/USD) benefited from the Middle East news opened with a big bullish gap after posting losses in the previous week. At the time of press, XAU/USD was trading above $4,300, rising more than 2% on the day.