Dollar and Yields Rise as the Iran War Heads Into a Fourth Week
The U.S. dollar rallied and Treasuries sold off on Friday as investors grew more concerned the war in Iran could drag on and weighed the risk of another energy-price spike over the weekend. The move reflected a return to defensive positioning as markets remained highly sensitive to war-related headlines.
The Bloomberg Dollar Spot Index climbed about 0.5%, tracking the rise in U.S. Treasury yields, after reports emerged that the Pentagon is deploying thousands of additional Marines to the Middle East. Despite Friday’s bounce, the dollar index was still down about 0.5% for the week, on track for its worst weekly performance in a month.
Mizuho’s Jordan Rochester questioned whether markets truly want to lean into an optimistic narrative heading into another weekend, given the potential for escalation. He noted that Thursday’s calming comments from Donald Trump and Benjamin Netanyahu could quickly be overwhelmed if markets reopen on Monday with crude spiking again after fresh attacks on energy assets.
Netanyahu said Israel will no longer target energy infrastructure and suggested the war could end sooner than expected, arguing Iran is no longer able to enrich uranium or manufacture ballistic missiles. Even so, traders remained cautious, with the risk premium still embedded in energy markets. Brent crude traded around $112 a barrel.
Positioning data also signaled a shift toward the dollar. Commodity Futures Trading Commission (CFTC) figures released Friday showed traders turned bullish on the dollar for the first time this year, underscoring the rotation back into the greenback as a relative haven.
In FX, USD/JPY rose about 1% to 159.30, trimming its weekly decline to roughly 0.3%. Tensions between the U.S. and Japan over the Iran war remained visible even as Trump hosted Japanese Prime Minister Sanae Takaichi on Thursday, while saying Tokyo was answering his call for support.
In Europe, EUR/USD slipped about 0.2% on Friday to 1.1566, paring its weekly gain to around 1.3%, though it was still poised for its best week since January. ECB Governing Council member Joachim Nagel said the European Central Bank may need to consider raising rates as soon as next month if price pressures intensify due to the Iran war.
Elsewhere, GBP/USD fell about 0.7% to 1.3334, while AUD/USD dropped roughly 1% to 0.7018.
Source : Newmaker.id
