Dollar Strengthens Sharply After Trump Pledges More Strikes on Iran
The US dollar surged on Thursday (April 2nd) after US President Donald Trump's speech on Iran dashed hopes for a quick end to the conflict. Trump's remarks drove flows into safe-haven assets as oil prices rose and stock markets corrected, bolstering demand for the greenback.
In a televised address, Trump promised to launch more aggressive strikes on Iran in the next two to three weeks, without providing a concrete timetable for opening the Strait of Hormuz or a clear plan to end the war that has rocked markets. The Iranian military responded by warning the US and Israel would face a "more devastating, more widespread, and more destructive" attack.
In the foreign exchange market, investors quickly dumped riskier assets and turned to the dollar, putting downward pressure on the yen, euro, and pound. The dollar index (DXY) rose 0.68% to 100.24, marking its best daily gain since March 18th and erasing most of the previous two days' losses when optimism for de-escalation had emerged.
Pressure on non-dollar currencies continued as oil prices strengthened in European trading. The euro fell 0.66% to US$1.1513, and the pound weakened 0.88% to US$1.319. The Australian dollar, which is sensitive to global growth sentiment, fell 0.95% to US$0.6863.
The Japanese yen weakened 0.6% to 159.72 per dollar, approaching the psychological level of 160, often seen as a sensitive point for potential intervention by Japanese authorities. In commodity markets, Brent rose nearly 8% to around US$109.10 per barrel, reflecting concerns about longer-term supply disruptions.
In the bond market, Trump's comments also pushed US Treasury yields higher as the market believed rising oil prices could boost inflation and reduce the scope for interest rate cuts. The combination of risk-off sentiment, expensive oil, and rising yields are key factors keeping the dollar strong in the short term.
Source: Newsmaker.id
