The US Dollar index has now crossed the mark of 99.5 on rising haven demand as the US has threatened to further deepen the war with Iran, denting sentiment for risk assets.
Losses this morning against the greenback are being led by the Swedish krona, euro and Danish krone, while the South African rand and Mexican peso dropped the most among major emerging market currencies. The Indian rupee is yet to begin trading.
“The dollar has been seen as the ultimate safe-haven due to its liquidity, while also being buoyed by the rise in oil prices,” said Matthew Ryan, head of market strategy at financial services firm Ebury. “We favor continued upside in the dollar so long as the war drags on without an immediate end in sight.”
Inflation fears have also resurfaced due to the rise in oil prices, further dwindling hopes of the US Federal Reserve and other global central banks easing interest rates further. Futures markets had already cut down on the US Fed cutting rates only once this year, down from as many as three at the start.
A surge in the greenback has led to further weakening of the Japanese Yen this morning by 0.4%, bringing it close to levels that could lead to market speculation over possible interventions by authorities.
(With Inputs From Agencies)
