The Bloomberg Dollar Index reached its highest closing level in nearly two months as oil prices surged, driven by concerns that shipping disruptions in the Strait of Hormuz could persist and the Middle East conflict may prolong. The yen weakened against the dollar, falling past the 159 level.
The Bloomberg Dollar Index rose 0.5% after Iran's Supreme Leader Mujtaba Khamenei, in his first public remarks since taking office, stated that the Strait of Hormuz should remain closed.
Bipan Rai, Managing Director at BMO Asset Management, noted that the dollar's strength appears aligned with rising risk-off sentiment. He added that the broad increase in U.S. Treasury yields and the decline in U.S. stocks suggest that markets require more than just rhetoric regarding a de-escalation path for the conflict.
Brent crude futures settled above $100 per barrel for the first time since August 2022, following attacks on two oil tankers in Iraqi waters and Oman's directive for all vessels to evacuate the key oil export terminal Mina Al Fahal.
The USD/JPY pair rose 0.3% to an intraday high of 159.43, with strategists indicating a high threshold for official intervention by Japanese authorities.
EUR/USD fell 0.5% to 1.1515, marking its third consecutive day of decline and the longest losing streak in four weeks.
Standard Chartered expects the British pound and the euro to continue underperforming in the coming weeks, as the Iran conflict weighs on energy-import-dependent economies.
GBP/USD declined 0.5% to 1.3344.
Goldman Sachs economists delayed their forecast for the next Bank of England rate cut from April to July, citing the sharp rise in oil prices resulting from the Iran conflict.
USD/CAD rose 0.2% to 1.3626.
AUD/USD fell 1% to 0.7081.
NZD/USD dropped 1% to 0.5855.
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