Oil Prices Plummet as Iran Deal Hopes Rise, Yen Sees Surprise Boost
Oil prices plummeted on Monday as hopes of a peace deal in the Middle East rose. U.S. President Donald Trump announced that talks with Iran would take place, following his earlier decision to call off an imminent attack on the country.
The Strait of Hormuz and Tehran's nuclear capabilities are at the center of the negotiations. Brent crude futures sank more than 6% to $82.41, while S&P 500 futures rose 0.4% and Nasdaq futures gained 0.6%. However, Japan's Nikkei dipped 1%, and South Korea's KOSPI slid 3.6%, after a turbulent July in which it fell 22%.
The Japanese yen suddenly spiked more than 1% to 155.39 per U.S. dollar, prompting traders to anticipate another bout of intervention. Japan and the U.S. conducted coordinated yen-buying intervention, with the Japanese finance ministry confirming that they will not hesitate to take further action if necessary.
Mizuho Bank strategist Masayuki Nakajima noted that the objective was likely not to reverse the broader trend of dollar/yen appreciation, but to temporarily halt the yen's slide. He stated that 'it is difficult to argue that the secular depreciation trend in the yen has fundamentally changed.'