The US dollar held near its strongest level in a week against major currencies on Wednesday as renewed US strikes on Iran heightened geopolitical concerns and pushed oil prices higher.
The dollar index, which tracks the greenback against a basket of six major currencies, stood at 101.18 during Asian trading hours, its highest level since July 2.
Investor demand for the safe-haven currency increased after the US launched a fresh wave of strikes against Iran following attacks on vessels in the Strait of Hormuz. Washington also revoked a licence that had allowed Iran to sell oil internationally, adding further uncertainty to energy markets.
Westpac analysts said concerns over the stability of the peace agreement had resurfaced following the attacks.
“Concerns over the inflation outlook were in focus, seeing yields jump higher across the globe,” the analysts wrote in a research note.
Oil prices extended their gains for a second straight session, with Brent crude rising 2.6% to US$76.12 per barrel during early Asian trading, as markets assessed the potential impact of renewed tensions in the key shipping route.
Against other major currencies, the dollar strengthened 0.1% against the Japanese yen to 162.28 yen, while the euro slipped 0.1% to US$1.1405. The British pound also eased 0.1% to US$1.3353, while the Australian dollar was little changed at US$0.6926.
Meanwhile, the New Zealand dollar edged 0.1% higher to US$0.5681 ahead of the Reserve Bank of New Zealand’s interest rate decision, where markets are expecting a possible rate hike.
In the cryptocurrency market, Bitcoin fell 0.2% to US$63,518.35 while Ether declined 0.5% to US$1,774.45.
Reuters
