Asia-Pacific FX: U.S.-Iran talks may resume; oil eases

U.S.-Iran diplomatic talks could resume as soon as Thursday, a development that pushed oil prices lower and reduced near-term pressure on Asia-Pacific currencies. Negotiators and U.S. officials described progress in recent exchanges and left the door open for further direct or intermediary-led discussions.

U.S. Vice President JD Vance described negotiators as having made “a lot of progress” and added that the “ball [is] in Iran's court.” Officials indicated direct negotiations stalled at times but continued through intermediaries, with another round possibly starting Thursday. Markets reacted modestly: crude futures eased from recent highs and the dollar slipped for a seventh straight session.

In currency markets, the euro, sterling and yen strengthened against the dollar, supporting several emerging-market currencies that had been pressured by higher energy costs. The dollar index hovered near multi-week lows, and commodity-linked currencies such as the Australian dollar recovered some ground despite regional central bank caution.

China's first-quarter trade data showed exports up 2.5% year-on-year, below forecasts, while imports surged 27.8%, narrowing the trade surplus sharply. The figures reflect stronger domestic demand and higher import costs, including for energy. The People's Bank of China set the USD/CNY midpoint at 6.8593, above market estimates.

Australia's NAB business confidence index plunged to -29 in March from zero, one of the largest monthly declines on record, while business conditions remained slightly positive at +6. RBA Deputy Governor Michele Bullock Hauser warned that inflation remains too high and said interest rates will need to rise further to return consumer prices toward target, noting a risk from elevated energy costs.

The Monetary Authority of Singapore tightened policy by steepening the slope of its S$NEER band, citing rising imported inflation and a likely slowdown in growth.

U.S. Treasury official Sarah Bessent urged a “wait and see” approach on policy, saying central banks will need to balance growth and inflation risks in the coming weeks. The U.S. Energy Secretary and industry forecasts have highlighted upward pressure on oil prices if hostilities continue, and the International Energy Agency has kept further strategic reserve releases as an option should supply be disrupted.

Key issues remain unresolved in the U.S.-Iran discussions, including Iran's nuclear activities, conditions for lifting sanctions and guarantees over reopening the Strait of Hormuz. Negotiators reportedly came close to an agreement before talks stalled, and officials said dialogue will continue through diplomatic channels if direct meetings do not resume immediately.

Market participants are monitoring oil-price movements and incoming economic data for signs on whether diplomatic progress holds. Traders are also watching central bank decisions and regional political talks that could affect energy routes and market volatility.