US Dollar Soars to Weekly High as Fresh US Strikes on Iran Boost Safe Haven Demand
Market Reaction to Renewed US-Iran Tensions
By Gregor Stuart Hunter
Dollar Index and Safe Haven Demand
SINGAPORE, July 8 (Reuters) - The dollar clung to its highest levels of the week against most of its peers at the start of trading in Asia on Wednesday as the U.S. renewed strikes on Iran, renewing geopolitical tensions and sending oil prices higher.
The dollar index, which measures the greenback's strength against a basket of six currencies, traded at 101.18, its highest level since July 2.
Impact of US Strikes on Iran
The bids for safe haven currency came after the U.S. unleashed a new wave of strikes against Iran on Tuesday and revoked a licence allowing the country to sell oil after three tankers were attacked in the Strait of Hormuz.
Analyst Insights and Oil Price Movements
Westpac analysts wrote in a research report that concerns for the stability of the peace deal reemerged after Iran attacked ships crossing the Strait of Hormuz. "Concerns over the inflation outlook were in focus, seeing yields jump higher across the globe," they wrote.
Brent crude was up 2.6% at $76.12 a barrel at the start of the Asian trading session on Wednesday, extending a rally into a second day.
Currency Market Movements
The kiwi dollar was 0.1% stronger at $0.5681 ahead of a decision by the Reserve Bank of New Zealand later at which it is narrowly expected to raise interest rates for the first time in more than three years.
Against the yen, the U.S. dollar strengthened 0.1% to 162.28 yen. Bank of Japan board member Toichiro Asada, the sole dissenter to the BOJ's decision in June to raise interest rates, told Reuters on Monday he must see signs of demand-driven inflation before supporting further hikes.
The euro slipped 0.1% to $1.1405, while the British pound nudged 0.1% lower to $1.3353. The Australian dollar was steady at $0.6926.
Cryptocurrency Market Update
Bitcoin was down 0.2% at $63,518.35, while ether was 0.5% lower at $1,774.45.
(Reporting by Gregor Stuart Hunter; Editing by Stephen Coates)
