Dollar Rises on Haven Flows; Aussie Lags Ahead of CPI
The U.S. dollar strengthened on safe-haven demand as fighting between the U.S.-Israeli alliance and Iran continued, even as President Donald Trump claimed talks were underway to end the war. The Australian dollar was the worst-performing G10 currency ahead of domestic inflation data.
The Bloomberg Dollar Spot Index rose 0.2% after climbing as much as 0.4% earlier in the session. Monex strategist Andrew Hazlett said overnight strikes between Iran and Israel revived demand for the dollar because there was “no operational equivalent” of Trump’s pause from either side. He added that Trump’s comments initially led to a mispricing of risk, but markets were “pricing that risk back in” as there was no clear de-escalation and “you can’t flip an on/off switch in war.”
On the U.S. data front, a preliminary estimate from ADP Research and the Stanford Digital Economy Lab showed private payrolls rose by an average of 10,000 per week over the four-week period ending March 7. Meanwhile, growth in U.S. business activity slowed in March to an almost one-year low, while prices paid for materials and other inputs picked up.
S&P Global’s flash March composite PMI fell 0.5 point to 51.4, with readings above 50 indicating expansion. Elias Haddad of Brown Brothers Harriman said the flash PMI “challenges the FOMC’s benign stagflation narrative,” noting that input and output prices spiked due to the war-driven jump in energy prices. Win Thin of Bank of Nassau 1982 said the impact of the Iran conflict is beginning to show up in the PMI surveys, adding that while the U.S. may be less vulnerable to an energy shock than Europe or Asia, it is “certainly not invulnerable.”
In Europe, EUR/USD slipped 0.2% to 1.1589 after data showed euro-area private-sector activity expanded at the slowest pace since last May, as the war stokes inflation risks while threatening a still-fragile recovery.
In the Asia-Pacific region, AUD/USD fell 0.7% to 0.6964 ahead of Australia’s February CPI report. Bloomberg Economics’ James McIntyre expects inflation to hold steady above the Reserve Bank of Australia’s 2%–3% target band. NZD/USD declined 0.6% to 0.5825 after New Zealand’s central bank governor signaled policymakers won’t rush to raise interest rates in response to the Middle East conflict, saying they are prepared to wait out surging fuel costs provided the disruption doesn’t trigger broader inflation pressures.
Elsewhere, USD/JPY advanced 0.2% to 158.79. Japan’s Prime Minister Sanae Takaichi is reportedly looking to ramp up the country’s response to the fallout from the Iran war, including a review of the ecosystem of oil-related products, as the risk of shortages and broader economic spillovers increases.
Source : Newsmaker.id
