The dollar held near a two-month high on Thursday as fresh Gulf hostilities sent oil prices higher, while the Japanese yen hovered near the key 160 level.
Noriko Hayashi | Bloomberg | Getty Images
The dollar slipped from a two-month high on Thursday as optimism rose about a ceasefire in Lebanon, while markets were alert to the possibility of intervention as the Japanese yen hovered near the key 160 level.
Lebanese President Joseph Aoun said on Thursday that the ceasefire would come into force within 24 hours of all concerned parties approving it.
Iran has said a ceasefire in Lebanon is a key stage in advancing broader peace talks. Hezbollah, however, has not yet commented on the agreement.
The euro rose 0.3% to $1.163. A Reuters poll showed that the European Central Bank is set to raise its deposit rate to 2.25% on June 11 to curb inflation. The British pound also climbed 0.2% to $1.344.
The dollar index, which measures the greenback against major peers, fell 0.2% to 99.28, just below the two-month high of 99.56 reached in the previous session.
Iranian attacks on Kuwait damaged its airport and injured dozens on Wednesday, while the U.S. military carried out strikes near the Strait of Hormuz, complicating prospects for a diplomatic end to the war and lifting the safe-haven dollar.
“It’s hard to argue against dollar strength at this juncture,” said Francesco Pesole, currency strategist at ING.
“Data continues to paint a picture of resilience for the U.S. economy,” he added, “and fresh US-Iran military exchanges have driven a risk-off shift in global markets.”
The risk-sensitive Australian dollar was up slightly at $0.714 after data showed Australia’s balance on goods trade swung back into surplus in April.
On the data front, a survey on Wednesday showed a measure of prices paid by U.S. services businesses jumped to the highest level in nearly four years last month. This cements economists’ views that the Federal Reserve would hold interest rates unchanged well into next year.
The Japanese yen fetched 160.01 per dollar, off lows on Wednesday that pushed it past the critical 160-per-dollar mark for the first time since April 30, triggering verbal warnings from authorities.
The 160 level is widely seen in markets as a line in the sand for potential official intervention.
Bank of Japan Governor Kazuo Ueda cemented a June rate hike in a narrative pivot toward inflation-fighting, as the Iran war-driven energy shock sharpens price risks and opens the door to more frequent increases in borrowing costs.
“The hawkish tone has strengthened further, including a clear expression of concern about behind-the-curve risk,” wrote Naohiko Baba, head of Japan research and chief Japan economist at Barclays. “We stick to our June rate hike call.”
Bitcoin hit a four-month trough of $61,340.71 and was last 2% lower at $64.210.92.
