Dollar firms as Mideast worries cast shadow, Norges Bank delivers surprise cut
The dollar edged up on Thursday as the threat of a broader Middle East conflict loomed over markets, while a flurry of central bank decisions, including a surprise cut from Norway kept traders busy.
Rapidly rising geopolitical tensions have boosted the dollar, which has reclaimed its safe-haven status in recent days.
Iran and Israel carried out further air attacks on Thursday, with the conflict entering its seventh day. Concerns over potential U.S. involvement have also grown, as President Donald Trump kept the world guessing about whether the United States will join Israel’s bombardment of Iranian nuclear sites.
The Federal Reserve left rates steady on Wednesday. The Bank of England also left rates unchanged on Thursday, citing elevated global uncertainty and persistent inflation as concerns for the economic outlook. The pound fell initially, but later recouped most of those losses.
The Swiss franc, meanwhile, was stronger against the dollar following an expected rate cut from the Swiss National Bank.
But the surprise came from the Norges Bank, which delivered a 25 bps rate cut, while markets had expected the Norwegian central bank to hold rates.
The dollar and the euro both surged against the Norwegian crown, and were last up 1% and 0.7%. The crown is still one of the top-performing major currencies against the dollar this year, with a gain of around 11%.
Meanwhile, the euro held in negative territory at $1.1484. The dollar rose 0.3% against the yen to 145.62.
The dollar index, which measures the currency against six others, was flat at 98.9 and was set for about a 0.8% gain for the week, its strongest weekly performance since late February.
Some analysts said investors were looking to cover their short-dollar positions.
U.S. markets are closed on Thursday for the federal Juneteenth holiday, which could mean liquidity is lower.
Source : Reuters
