Dollar steady, no respite for yen after BOJ hikes rates as expected

By Sophie Kiderlin

LONDON, June 16 (Reuters) - The dollar held astatine 10-day lows connected Tuesday arsenic a preliminary woody to extremity the Iran warfare buoyed hazard appetite, portion the yen teetered adjacent the intimately watched 160 level aft ‌the Bank of Japan hiked involvement rates, arsenic expected, successful an effort to tame inflationary risks from the conflict.

President ‌Donald Trump said connected Monday that a preliminary statement to extremity the warfare had been signed by the U.S. and Iran. But doubts swirled arsenic shippers said ​it could instrumentality weeks for assurance to instrumentality aft immoderate reopening of the Strait of Hormuz and cardinal questions remained unanswered.

The Bank of Japan raised involvement rates to a 31-year precocious arsenic wide expected. But the board's 7-1 ballot suggested astatine slightest immoderate uncertainty implicit the timing of the adjacent hike.

"We'll look astatine whether the system and prices are moving successful enactment with our forecasts, arsenic good arsenic ‌risks. With underlying ostentation approaching 2%, we ⁠need to beryllium mindful of upward terms risks. We volition usher argumentation truthful that we won't autumn down the curve," said BOJ Deputy Governor Shinichi Uchida astatine a property briefing.

Derek Halpenny, caput of probe for ⁠global markets EMEA astatine MUFG, said the BOJ was arsenic hawkish arsenic could person been expected.

"They've emphasised upside ostentation risks. They've made that rather clear. They've made precise wide that the monetary stance is inactive accommodative, and they've made wide that the guidance is the aforesaid arsenic ​before, ​which is fundamentally that they tin proceed to rise rates going forward," ​he said.

The yen was astir unchanged connected the time ‌at 160.31 per U.S. dollar, having hovered adjacent the 160 milestone successful caller days, keeping traders wary of different bout of involution from Tokyo.

The Reserve Bank of Australia near rates unchanged successful a unanimous determination aft 3 consecutive hikes adjacent arsenic ostentation remains elevated. The Australian dollar was past small changed astatine $0.706 aft recouping immoderate earlier losses.

IRAN DEAL LIFTS SENTIMENT BUT DOUBTS LINGER

While planetary markets appeared cautiously optimistic implicit the Iran quality and lipid prices pulled back, currencies were comparatively constrained arsenic traders waited for the latest ‌monetary argumentation decisions besides from the Bank of England and the U.S. ​Federal Reserve aboriginal this week.

The dollar index, which measures the U.S. currency against ​six others, was dependable astatine 99.58.

The euro was 0.16% ​higher astatine $1.1605 and sterling was small changed astatine $1.3422.

Both the Fed and BoE are expected to permission involvement ‌rates unchanged, with traders watching intimately for immoderate clues ​about the imaginable argumentation paths ahead.