The dollar has given up some of its safe-haven appeal, driven by expectations that the conflict in the Middle East could be contained, sending once-high oil prices lower and riskier assets rising.
The price of the dollar reached 157.73 yen and 1.1632 against the euro at the beginning of Asian trading, but it retreated from its highest levels the previous day after US President Donald Trump said that Washington was “far ahead” in the war against Iran than his initial estimates by four to five weeks.
Reuters reported that the price of Brent crude futures reached $92.46 per barrel in Asian morning trading, down from its highest level of $120 on Monday.
The Australian dollar, which is highly susceptible to risks, remained stable at about 0.7068 US dollars, after hovering in the range of 70 cents since the beginning of the conflict.
“The market is just catching its breath,” said Rodrigo Catril, chief currency strategist at National Australia Bank in Sydney. “We are cautious that it may not be that simple once the end of the war is announced. We feel that we have not seen the end of the volatility yet.”
The dollar was the preferred haven for traders, as the US and Israeli attacks on Iran halted oil and gas exports through the Strait of Hormuz, leading to higher energy prices.
Investors fear this will limit global growth by imposing taxes on business and consumption, while at the same time prompting central banks to delay interest rate cuts.
The pound sterling recovered after its decline on Monday and settled at $1.3412, while the New Zealand dollar settled at $0.5932.
