Iran Blockade Begins, Dollar Returns to Safe Havens
The US dollar strengthened on Monday (April 13) after US-Iran peace talks collapsed and the US Navy prepared to enforce a blockade on Iranian ports, rekindling risk-off sentiment and boosting demand for safe haven assets. The dollar index (DXY) rose 0.16% to 98.88, with EUR/USD down 0.18% to US$1.1698. This strengthening came after the dollar recorded its largest weekly percentage decline since mid-January.
The main catalysts came from energy and geopolitics. Oil prices surged after the US Central Command said the blockade would take effect at 10:00 a.m. ET (14:00 GMT) and would be enforced "indiscriminately" on vessels from all countries entering or leaving Iranian ports in the Gulf and Gulf of Oman. WTI rose 6.94% to US$103.27/barrel and Brent rose 6.86% to US$101.73/barrel, placing the latest ceasefire in increasingly fragile condition. Since late February, the Middle East conflict is said to have pushed oil prices up by around 40%, heightening concerns about a combination of higher inflation and slowing global growth.
Among riskier currencies, AUD/USD fell 0.21% to 0.7045 and NZD/USD fell 0.09% to 0.5827. Against the yen, the dollar rose 0.28% to 159.74 as the yield on the 10-year Japanese government bond rose 3.2 basis points to 2.496%, a nearly three-decade high. Bank of Japan Governor Kazuo Ueda said economic and price developments were proceeding roughly in line with the central bank's projections, but emphasized caution regarding the impact of the Middle East conflict.
At the same time, the response of commodity-linked currencies was not entirely unidirectional: the dollar weakened 0.47% against the Norwegian krone to 9.488, while the Canadian dollar edged up 0.01% to C$1.383 per dollar, highlighting their differing sensitivities to oil movements. In Central Europe, the Hungarian forint strengthened after the center-right Tisza party secured a landslide victory over Viktor Orban, according to market reports.
The focus will now be on the details of the blockade's implementation, Iran's response, the dynamics of energy flows, and whether the oil rally will last long enough to change inflation and interest rate expectations. The market will also be monitoring yield movements, central bank comments, and currency volatility triggered by geopolitical headlines.
Source: Newsmaker.id
