Oil prices fell sharply at the start of the week as hopes for a peace agreement between the United States and Iran increased. Meanwhile, the Japanese yen jumped after the U.S. and Japan confirmed coordinated intervention to support the currency.

Oil Falls More Than 6%

Brent crude futures dropped more than 6% to $82.41 per barrel after U.S. President Donald Trump said talks with Iran would take place on Monday.

Trump had previously called off an imminent strike on Iran to allow more time for negotiations aimed at reopening the Strait of Hormuz and resolving the dispute over Tehran’s nuclear capabilities.

The prospect of easing tensions in the Middle East quickly reduced the geopolitical risk premium embedded in oil prices.

Asian Stocks Remain Volatile

S&P 500 futures rose 0.4%, while Nasdaq futures gained 0.6%.

In Asia, Japan’s Nikkei 225 fell 1%, South Korea’s KOSPI dropped 3.6%, and MSCI’s broadest index of Asia-Pacific shares outside Japan declined around 1%.

The moves show that investors remain cautious despite improving expectations for U.S.-Iran negotiations.

Yen Jumps After U.S.-Japan Intervention

The yen strengthened by more than 1% to 155.39 per U.S. dollar after Japan and the United States confirmed that they had jointly bought the currency.

The rare bilateral intervention was aimed at preventing further yen weakness after the currency fell to its lowest level in about 40 years.

However, analysts warned that the action may not reverse the yen’s longer-term decline because the wide interest-rate gap between the United States and Japan continues to weigh on the currency.

Conclusion

Markets are reacting to two major developments: hopes for a U.S.-Iran agreement have pushed oil prices sharply lower, while coordinated U.S.-Japan intervention has triggered a rapid recovery in the yen.

In the near term, investors will continue to monitor the outcome of talks with Iran and whether further intervention is needed if the yen begins to weaken again.

Source: Reuters