The U.S. dollar was broadly steady on Thursday as renewed tensions between Washington and Tehran kept investors on edge and supported demand for the safe-haven currency, while the Japanese yen remained near its weakest level in 40 years, with little sign of a sustained recovery.
The U.S. Dollar Index, which measures the greenback against a basket of major currencies, held at 101.11. The dollar has been supported by escalating tensions between the United States and Iran, which have pushed oil prices higher and renewed concerns about inflation.
Brent crude futures rose more than 1.3% to $95.31 per barrel after the U.S. military announced another round of airstrikes on Iran and Yemen’s Houthis claimed responsibility for targeting two Saudi oil tankers, raising fears of further disruptions to oil shipments through the Red Sea.
Meanwhile, yields on two-year U.S. Treasury notes climbed to their highest level in 17 months on Wednesday, as higher oil prices fueled inflation concerns and increased expectations that the Federal Reserve could raise interest rates.
The euro edged up 0.02% to $1.1412 ahead of a European Central Bank policy meeting later on Thursday. While the ECB is widely expected to leave interest rates unchanged, policymakers are likely to keep the door open for a possible rate hike in September, as rising energy prices threaten to add further inflationary pressure.
The Australian dollar slipped 0.1% to US$0.6989, while the New Zealand dollar fell by nearly 0.1% to US$0.5811. The British pound was last trading at US$1.3373.
The Japanese yen gained 0.02% to 163.1 per U.S. dollar, giving up earlier gains after Bloomberg News reported that officials at the Bank of Japan were open to raising interest rates at a faster pace than economists had anticipated.
Japan’s Finance Minister has repeatedly issued verbal warnings about possible intervention in the foreign exchange market, while Tokyo carried out yen-buying operations in April and May.
Despite those efforts, analysts said the yen’s broader downward trend remains intact, citing the strength of the U.S. dollar and Japan’s still-low interest rates.
Source: Reuters
