Middle East De-escalation Hopes Impact Oil

Reports that the US called off a planned military attack on Iran prompted a decline in West Texas Intermediate crude oil prices, with the benchmark falling below $102.00 per barrel. While the news revived hopes for a diplomatic resolution and boosted Australian equities, officials in Japan noted they are closely monitoring the economic effects of the ongoing uncertainty in the region.

Broad US Dollar Strength on Hawkish Fed Bets

The US Dollar Index gained ground, trading above 99.00, as markets priced in rising odds of a more hawkish stance from the Federal Reserve. This broad strength in the greenback weighed on other major currencies, contributing to declines in the Euro, British Pound, Swiss Franc, and the Canadian, Australian, and New Zealand Dollars.

Hawkish RBA Minutes Fail to Lift Australian Dollar

The Reserve Bank of Australia expressed growing concern over the risk of rising inflation expectations, with minutes from its recent meeting showing members saw a strengthening case for a rate hike. RBA officials noted that higher energy costs could quickly pass through to consumer prices. Despite the central bank's hawkish tone, the Australian Dollar weakened in the face of the stronger US Dollar.

Strong Japanese GDP Fails to Support Yen

Japan's economy expanded by a stronger-than-expected 0.5% in the first quarter, surpassing forecasts on the back of resilient consumption and exports. Despite the positive economic data, the Japanese Yen remained subdued, failing to gain ground against the broadly stronger US Dollar. Elsewhere in Asia, the People’s Bank of China set a firmer daily reference rate for the yuan.