The US dollar surged on Monday while the Japanese yen fell to its lowest level in more than six weeks, as investors anxiously awaited any Iranian response to the US attack on its nuclear site. Despite rising geopolitical tensions, foreign exchange markets remained calm, with analysts saying investors were reluctant to take big risks in a situation that remains uncertain.
Iran called US President Donald Trump a “gambler” for joining Israel’s military campaign, and warned that the US attack had expanded the list of legitimate targets for its military. In fact, Iran’s parliament has approved a move to close the Strait of Hormuz, a vital route for almost 25% of global oil exports, potentially causing major disruptions to global energy markets. At the same time, several major US cities saw anti-war protests in response to the military action.
The dollar rose 1.3% against the yen, while the euro and pound each fell despite mixed economic data from Europe and the UK. The Australian and New Zealand dollars, often used as risk markers, also fell to new lows. The dollar's rebound was seen as a sign of safe-haven demand, although investors remain wary of putting their full faith in the greenback amid volatile geopolitical conditions.
Markets are now awaiting statements from the leaders of Iran, Israel and the US, as well as Federal Reserve Chairman Jerome Powell's semi-annual testimony to Congress. Despite the heightened risks, the modest moves in the market suggest investors are not yet ready to panic completely. In other news, Bitcoin recovered 1.8% after falling nearly 4% the day before, reflecting mixed sentiment in the risk-on asset class as the world teeters on the brink of greater conflict.
