Dollar falls to multi-week lows

The safe-haven US dollar dropped ​to multi-week lows on Friday as risk appetite soared after Iran said the Strait of Hormuz is open, boosting optimism that the Middle East ‌conflict is winding down.

In afternoon trading, the dollar index , which measures the greenback against a basket of six currencies, fell 0.3 percent to 97.96 after earlier ​dropping to 97.632, its lowest in seven weeks.The index was down 0.6 percent on the week, set for a second straight weekly decline. Over the past two weeks, ​it has fallen about 2.1 percent, its largest two-week drop since late January.

“The dollar’s weakness is mainly about the market unwinding the geopolitical risk premium,” said George Vessey, lead FX and macro strategist at Convera in London. “I don’t think we are pricing in a fundamentally weaker US dollar because there are question marks around the Federal Reserve, what’s the Fed’s next move ​is going to be after inflation came out hotter than expected.

So the economy is still somewhat resilient so it’s not going to be the start ​of a full structural dollar decline.”

BOJ LIKELY TO HOLD RATES THROUGH JUNE

Against the Japanese yen , the dollar slid 0.6 percent to 158.22 after earlier climbing to 159.86. It was on track ‌to post ⁠its largest weekly drop in nine weeks.