The U.S. dollar held firm against most major currencies on Thursday as renewed attacks in the Iran conflict boosted demand for safe-haven assets, while higher oil prices strengthened expectations of further interest rate hikes, keeping the Japanese yen under pressure.
The dollar traded at 162.41 yen, hovering near its strongest level since early July. The euro and the British pound were little changed at $1.1426 and $1.3392, respectively. The New Zealand dollar remained in demand after an interest rate increase, extending its gains by 0.5% to $0.5725, while the Australian dollar edged up 0.1% to $0.6936. Meanwhile, the U.S. Dollar Index, which measures the greenback against a basket of six major currencies, was little changed at 100.96.
Kyle Rodda, Senior Financial Markets Analyst at Capital.com, said escalating tensions in the Middle East had once again unsettled global markets and reintroduced a war-risk premium into asset prices. He noted that rising oil prices could fuel inflation and accelerate expectations for higher U.S. interest rates. The move followed a new wave of U.S. strikes on Iran, announced hours after President Donald Trump declared that the temporary agreement to end the conflict had “ended,” sending oil prices sharply higher. Markets subsequently increased the implied probability of a U.S. interest rate hike this year to nearly 87%, while Brent crude futures climbed to $79.28 per barrel after settling more than 5% higher at $78.02, their highest level in more than two weeks. Elevated oil prices continued to weigh on the yen, which remained close to its weakest level in nearly four decades against the dollar.
Reuters
