Dollar slips as Iran deal headlines swing oil and US housing data sinks

The dollar fell in the US session on Tuesday as headlines about a possible US-Iran deal swung oil prices, according to investingLive's Americas wrap. Weak US housing data added to the pressure, with pending home sales dropping to a record low.

This follows our earlier report on sterling's jobs-driven gain and the yen rally after Japan's bond auction. The afternoon brought new drivers: Middle East diplomacy and a run of soft US housing numbers.

What moved and why

Oil was the swing factor for most of the day. In the European morning, investingLive reported that crude surged further on Houthi attacks on Saudi energy targets and stalled US-Iran negotiations, which weighed on risk sentiment.

The tone shifted later. investingLive cited a report from Al Araby Al Jadeed that Qatar and Pakistan put a compromise proposal to Washington and Tehran. The plan reportedly already has American sign-off and some prior Iranian approval. Reported terms include the release of $6 billion in interest on frozen Iranian funds and Iranian agreement to visits at secret nuclear sites.

Ukraine headlines also ran through the session. According to investingLive, President Trump said Ukraine "has to want to settle this war" and warned it would be "a very bad thing" if it did not. Finland's President Stubb said a lot of progress had been made "under the radar" toward a peaceful solution.

US housing data disappoints

• Pending home sales fell 7.3% in September against a 0.5% drop expected, investingLive reports. The index fell to 66.0 from 71.2, a record low, and sales were down 12.6% year on year.
• Housing starts came in at 1.221 million, down from 1.305 million prior, according to investingLive. Building permits rose to 1.400 million against 1.395 million expected.

The majors at the ECB fixing

The ECB reference rates for 20 October show modest moves. The fixing is one official rate per business day, so it does not capture the later US-session swings.

Over five fixings since 13 October, USD/CAD is down 1.33%, USD/CHF is down 1.04% and NZD/USD is up 1.17%. For background on why the loonie tracks crude, see our sister site's explainer on commodity currencies and oil. Chart: USD/CAD.

The euro remained soft. Investing.com reported that short-end US yields edged up as investors digested French unrest.

Central banks and data in the news

• Bank of England: investingLive's Americas wrap says the BoE's Greene "keeps banging the hawkish drum, and she's not alone anymore." That adds to hike bets lifted by Tuesday's UK jobs beat. Chart: GBP/USD.
• ECB: Executive Board member Frank Elderson gave an interview to Die Presse.
• Germany: The October ZEW current conditions index rose to -35.9 against -45.0 expected, from -47.1, per investingLive. Economic sentiment fell to 28.1 against 30.0 expected, from 34.7, the softest reading since July.

What to watch next

1. UK CPI on Wednesday. investingLive notes that hot core figures could strengthen BoE hike expectations further.
2. US-Iran talks. Any confirmation or denial of the reported compromise could move oil and commodity currencies again.
3. Russia-Ukraine diplomacy. Watch for follow-up to Trump's and Stubb's comments.
4. French unrest. The euro remains exposed to further political headlines from France.