FX Daily: War is over – maybe in Daily Currencies Ratings 12/06/2026 USD: Peace deal may be close, legacy is a stronger dollar Financial markets reacted with predictable optimism to news that another US-Iran peace deal may be imminent. Many investors are taking their cue from the oil market, where the surprising softness in energy prices over recent weeks has many guessing that oil traders have the inside track on peace negotiations. Who knows for sure, but it does seem that some progress is being made towards a new 60-day deal where the Strait of Hormuz would be opened, and Iran would be able to sell its oil. Whether the Iranians want to hold out for better terms remains to be seen. So far, Iranian sources have yet to confirm agreement with the text in any Memorandum of Understanding. And the dollar has already retraced about a third of yesterday’s losses. For today, the market will again be headline-driven. Will Vice President JD Vance be getting on a plane to Europe to sign some kind of agreement? And more importantly, will we receive confirmation from Iran that it is happy with a deal and will also be sending a delegation to Europe this weekend? Expect the dollar to be bounced around today on the ebb and flow of these headlines. But the legacy issue of this crisis has been the substantial loss of energy supplies and its inflationary shock sent around the world. Unless oil starts shipping freely in the Strait of Hormuz very soon, our house call is that energy markets could move close to a tipping point in July. In turn, we would be wary about expecting much lower oil prices from current levels. With the fallout from the oil shock coming at a time of stable to positive US jobs numbers, investors are still wary of how the Fed will react. Short-dated US rates have come lower, but the market still prices 20bp of Fed tightening this year. It is hard to see that being unwound ahead of next Wednesday’s FOMC meeting, where a new-look statement and a new set of forecasts