* Iran undecided on attending peace talks after US forces board oil tanker
* Fed chief nominee Kevin Warsh urges central bank overhaul in Senate testimony
* US retail sales jump as higher gasoline prices and tax refunds boost consumer spending (Updated in New York afternoon time)
NEW YORK, April 21 (Reuters) – The U.S. dollar reached a one-week high on Tuesday as concerns grew that a ceasefire in the U.S.-Israeli war with Iran will take longer to reach and lead to prolonged disruptions in the Strait of Hormuz. Iran said on Tuesday it hadyet to decide whether to attend the peace talks after U.S. forces boarded a huge Iranian oil tanker at sea with just a day left before the ceasefire runs out in the war in the Gulf. “Investors are bracing for a more prolonged disruption in the Strait of Hormuz as US-Iran negotiations show signs of grinding to a standstill,” said Karl Schamotta, chief market strategist at Corpay in Toronto. “The two sides remain far apart on key terms, and a ceasefire deadline expires tomorrow,” he said. Markets have been swayed in recent days by contradictory headlines over whether or not U.S. Vice President JD Vance has departed for Pakistan for the talks. Vance has not yet departed Washington for talks on Iran and is participating in additional policy meetings, a White House official said on Tuesday. “We felt like maybe the Kumbaya moment was going to come, and it was going to be announced and then you open the Strait,” said Juan Perez, director of trading at Monex USA in Washington. “That hasn’t happened and that’s what markets really want.” The dollar has fallen this month on growing optimism of a ceasefire in the war, after gaining last month on safe haven demand due to the conflict. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was last up 0.36% at 98.43, with the euro down 0.44% at $1.1736.
The Japanese yen weakened 0.37% against the greenback to 159.39 per dollar. Sterling weakened 0.29% to $1.3493. Federal Reserve chief nominee Kevin Warsh, meanwhile, called for “regime change” at the U.S. central bank, including a new approach for controlling inflation and a communications overhaul that may discourage his colleagues from saying too much about the direction of monetary policy. Warsh made the comments in testimony before the U.S. Senate. The dollar was also supported earlier on Tuesday after U.S. retail sales increased more than expected in March as the war with Iran boosted gasoline prices and led to a record surge in receipts at service stations, while tax refunds underpinned spending elsewhere. “The data in the U.S. is telling a consistent story of a decent acceleration,” said Adam Button, chief currency analyst at investingLive. “That’s been obscured by the war and it should be a U.S. dollar tailwind because I find it hard to believe that we will go back to pricing in two cuts this year.” Futures traders are pricing in a 30% chance the Fed makes one 25-basis-point cut this year.
(Reporting by Karen Brettell; Additional reporting by Stefano Rebaudo; Editing by Nick Zieminski and Lisa Shumaker)
