Dollar Strengthens Slightly, Hormuz Risks and Yen Intervention Issues Lift Safe Haven Demand
The US dollar strengthened slightly against the euro at the start of the week, as the conflict in the Middle East rekindled market caution and bolstered demand for safe assets. The dollar index rose 0.1% to 98.269, holding steady amid the lack of signs of a resolution to the conflict after briefly falling from its peak following the US attack on Iran in early March.
Sentiment was briefly dampened after Iran's Fars news agency reported that two missiles struck a US warship near Jask in the Gulf of Oman, following an Iranian warning against the vessel's entry into the Strait of Hormuz. US Central Command denied the report, while the US military stated that two destroyers had entered the Gulf to break the Iranian blockade and that two US merchant ships had already passed through the Strait of Hormuz.
In Europe, the euro fell 0.1% to US$1.17135. Pressure also came from the issue of US-EU trade relations after Trump announced he would raise tariffs on EU cars and trucks to 25%, while the German government said it was coordinating with the European Commission in talks with Washington.
The yen's movement added to the dynamics of the foreign exchange market. The dollar fell 0.05% against the yen after strengthening as much as 0.75% to 155.69, rekindling speculation of Japanese intervention. Tokyo has not confirmed this, but Reuters sources said Japan is buying yen for the first time in two years, with estimated intervention spending reaching 5.48 trillion yen (approximately US$35 billion).
The pound sterling weakened 0.1% to US$1.35655, while the Australian dollar fell 0.2% to US$0.71905 ahead of the Reserve Bank of Australia's decision on Tuesday; most economists expect a cash rate increase to 4.35%. The market is now monitoring developments in the Strait of Hormuz, the potential response of Japanese authorities to the yen's value, the direction of US-EU trade negotiations, and the RBA's decision for further volatility. (Arl)*
Source: Newsmaker.id
