Media365
The US dollar remained near a one-week high on Wednesday as geopolitical tensions in the Middle East resurfaced after US President Donald Trump declared that an interim memorandum of understanding (MoU) with Iran to end the conflict was “over.” The remarks boosted demand for the safe-haven currency even as investors awaited the minutes of the US Federal Reserve’s June policy meeting for clues on the interest rate outlook.
The US Dollar Index, which measures the greenback against a basket of six major currencies, was little changed at 101.19, hovering around its strongest level since July 2.
Trump, speaking ahead of a NATO summit in Turkey, said he no longer wanted to engage with Tehran. However, a source familiar with discussions at the summit indicated that the US president did not repeat the announcement regarding the termination of the interim agreement during the meeting.
Market participants reacted cautiously to the comments, with analysts suggesting investors have become more measured in responding to Trump’s geopolitical statements.
“The dollar has reacted, but markets have learnt to take Trump’s comments with a pinch of salt. Even so, such remarks are likely to increase uncertainty and support demand for safe-haven assets,” analysts said.
The renewed tensions also lifted crude oil prices. Brent crude surged 5.85 per cent to $78.50 per barrel, extending gains for a second consecutive session as investors assessed the potential impact of escalating hostilities on global energy supplies.
The latest developments came after Iran’s Revolutionary Guards claimed responsibility for attacks on US military sites in Bahrain and Kuwait. The attacks followed US airstrikes on Iranian targets launched in response to assaults on commercial vessels in the Strait of Hormuz.
Meanwhile, currency markets also reacted to monetary policy developments in New Zealand. The New Zealand dollar pared early gains after the Reserve Bank of New Zealand raised its benchmark interest rate by 25 basis points to 2.5 per cent, a move that was widely expected. The central bank signalled that additional tightening may be required to keep inflation under control.
Investor attention is now firmly on the release of the Federal Reserve’s June meeting minutes, the first under Chairman Kevin Warsh. Traders will look for fresh insights into policymakers’ views on inflation and the future trajectory of US interest rates.
Analysts expect the minutes to reinforce the Fed’s cautious stance on inflation rather than signal an imminent shift toward rate cuts, which could continue to support the dollar.
Among major currencies, the US dollar rose 0.25 per cent against the Japanese yen to 162.49, marking its fourth straight day of gains. The euro slipped 0.1 per cent to $1.1397, while the British pound eased to $1.3336 as the stronger dollar weighed on major peers.
