The U.S. dollar rose on Tuesday, heading for its fourth consecutive session of gains, as the latest escalation in the Middle East pushed oil prices higher and renewed concerns that inflation could remain elevated.
Two tankers carrying Saudi crude oil to Asia reversed course in the Red Sea following threats by Yemen’s Houthi movement, which is aligned with Iran.
The widening conflict in the Middle East has disrupted shipping through two of the world’s most important energy trade routes.
The U.S. military announced on Monday that it had completed its latest round of strikes against Iran, marking the tenth consecutive night of military operations.
U.S. crude oil rose 2.09% to $84.97 per barrel, while Brent crude climbed 1.88% to $90.90 per barrel, after reaching an intraday high of $91.99, its highest level since June 11.
Earlier optimism over the possibility of a lasting peace agreement between the United States and Iran had helped push oil prices lower at the beginning of May. Weaker-than-expected U.S. inflation data had also reduced market expectations of an interest rate hike at next week’s Federal Reserve policy meeting.
The U.S. Dollar Index, which measures the greenback against a basket of major currencies, rose 0.17% to 101.16, while the euro fell 0.11% to $1.1402. The dollar is on track for its longest winning streak since mid-May.
“We’re now in the tenth night of attacks involving Iran, so the market is assessing the situation rationally,” said Erik Bregar, Director of Foreign Exchange and Precious Metals Risk Management at Silver Gold Bull in Toronto.
Despite the ongoing hostilities, diplomatic efforts to reach a resolution continue.
A senior Iranian official told Reuters on Monday that Tehran had received a proposal from mediators for a 10-day ceasefire.
However, U.S. President Donald Trump warned that the United States would respond if the Houthis carried out their threat to impose a blockade on commercial shipping in the Red Sea.
Meanwhile, the British pound fell 0.39% to $1.3376, marking its fourth straight daily decline, as investors assessed the likelihood of increased government spending and how it would be financed under new Finance Minister John Healey.
The Japanese yen weakened 0.41% against the dollar to 163.14 per dollar, breaking above the 163-yen level for the first time since December 1986, as traders continued to watch for signs of possible intervention by Japanese authorities in the currency market.
Source: AFP
