Asia FX rally as Iran ceasefire eases oil risk

Vice President JD Vance and former President Donald Trump made remarks on Iran negotiations while a ceasefire held for a seventh day, helping lift Asia-Pacific currencies as oil-related risk eased.

Vance described talks with Iran as advancing and outlined a “grand bargain” framework under discussion. He indicated he may lead a second round of talks with private envoys ahead of next week’s ceasefire deadline and indicated U.S. support for Iran’s economic reintegration if Tehran renounces nuclear weapons.

Trump appeared in a promotional clip describing the war as “very close to over,” then later cautioned that operations were not finished and that he was not considering extending the ceasefire.

Oil prices fell as the near-term geopolitical premium diminished, supporting higher-yielding regional currencies. The U.S. dollar remained modestly firm; USD/JPY pushed back toward 159.00. China’s central bank set the daily USD/CNY midpoint at 6.8582, above some market estimates.

A private survey showed a headline crude inventory build where a draw had been expected. More than 100 empty tankers were tracked heading to U.S. ports to load export crude. Reports indicated Iran cleared tunnels at a missile base during the ceasefire, raising questions about potential rearmament.

Japan’s Tankan survey recorded the largest drop in manufacturers’ sentiment in three years, citing higher energy costs and supply interruptions. Economists expect Australia’s upcoming labour figures to show little immediate impact from Iran developments, while warning of a possible slowdown later if energy markets remain unsettled.

Markets are watching scheduled speeches by Reserve Bank of New Zealand Governor Breman and Swiss National Bank Chair Schlegel for potential moves in NZD and CHF. Currency strategists at Deutsche Bank project the euro could rise toward and possibly above $1.20 as safe-haven demand eases and U.S. yields fall.

Asian equities extended gains in early trade but remained below session highs as investors balanced constructive diplomatic signals with ongoing supply and political risks.

Negotiators have discussed a possible extension of talks and the ceasefire, while gaps remain in several areas. Market participants are focused on whether follow-up meetings produce binding commitments and on upcoming economic data and central bank commentary that could shift currency and commodity flows.