Trump Prolongs Conflict, Dollar Rebounds Sharply
The US dollar strengthened sharply on Thursday (April 2nd) after two sessions of decline, following President Donald Trump's speech on Iran that dampened market expectations of an imminent end to the conflict. The change in tone revived demand for safe haven assets, boosting the greenback even against other safe-haven currencies such as the Swiss franc and the Japanese yen.
In a televised address on Wednesday, Trump promised more aggressive attacks on Iran in the next two to three weeks, without providing a concrete timetable for opening the Strait of Hormuz or ending the war that has shaken investor sentiment. The Iranian military later warned the US and Israel would face a "more devastating, broader, and more destructive" attack.
In the foreign exchange market, the dollar rose 0.6% to 0.799 per Swiss franc. Against the yen, the dollar strengthened 0.5% to 159.57, approaching the psychological level of 160, which often raises concerns about intervention by Japanese authorities. The euro fell 0.45% to US$1.1536 and the pound sterling weakened 0.63% to US$1.3222, paring some of its earlier gains. The dollar index rose 0.46% to 100.02. The Australian dollar weakened 0.3% to US$0.6904, while the euro strengthened 0.12% against the Swiss franc to 0.921.
The dollar's rise coincided with a surge in energy prices. Brent surged 7.78% to close at US$109.03 per barrel, reflecting a return to the supply risk premium after the market assessed potential disruptions as longer-lasting. On the interest rate front, Trump's comments briefly lifted US bond yields, but the movement subsided; the 10-year Treasury yield fell 1.6 basis points to 4.305%.
Market attention now turns to Friday's US non-farm payrolls report, which is projected to have risen by 60,000 in March. The employment data has the potential to influence expectations about the Federal Reserve's interest rate path, amid geopolitical dynamics that continue to drive the dollar, oil, and cross-asset volatility.
Source: Newsmaker.id
