The U.S. dollar strengthened for a third consecutive session, closing Friday at its highest level this year and marking a second straight week of gains. Reports that Washington has escalated strikes against Iran to unprecedented levels, coupled with the Pentagon's deployment of a Marine expeditionary unit to the Middle East, fueled safe-haven demand and triggered another surge in oil prices.
The Bloomberg Dollar Index rose more than 0.6% on Friday, climbing throughout the New York trading session in tandem with the rally in crude oil. The index gained over 1% for the week and has advanced nearly 2.5% so far in March.
"While downward revisions to fourth-quarter GDP and durable goods data may have exerted some downward pressure on interest rates and the dollar—more so than the PCE data—the impact was limited given the lag in GDP figures, effects of the government shutdown, and the volatile nature of monthly durable goods numbers," said Steven Englander, Head of G-10 FX Research at Standard Chartered.
Brent crude closed above $100 per barrel for the second day in a row.
"Rising U.S. stagflation risks are not favorable for the dollar," noted Elias Haddad, Global Market Strategist at Brown Brothers Harriman. "However, as long as shipping traffic near the Strait of Hormuz remains nearly stalled, the dollar can continue to benefit from safe-haven flows."
USD/JPY rose for a fourth consecutive day, gaining 0.2% to 159.66. During Friday's session, it reached 159.69, its highest level since July 2024.
Japanese Finance Minister Shunichi Suzuki told reporters that authorities are prepared to take all necessary measures under any circumstances to address currency movements, while also considering the impact of rising oil prices on people’s daily lives. Suzuki added that Japanese officials are maintaining very close communication with U.S. counterparts, even more so than usual.
EUR/USD fell for a fourth day, dropping to 1.1416, its lowest since August 1.
USD/CAD rose 0.7% to 1.3730, its highest since March 3, after data showed the Canadian economy lost the most jobs in over four years last month.
GBP/USD declined 0.9% to an intraday low of 1.3221, its lowest since December 3.
AUD/USD fell 1.1% to 0.7000, bringing its two-day decline to more than 2%.
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