The dollar recorded its biggest gain in a week on Wednesday after an Iranian missile attack on Israel prompted investors to buy safe assets amid concerns over the worsening conflict in the Middle East .
Early moves in Asia were light, leaving the euro below $1.10 after its biggest drop in almost four months overnight.
The search for safety kept the yen at 143.45 per dollar and the Swiss franc at 0.8463 per dollar. The New Zealand dollar fell 1.1% to $0.6283 and oil prices rose 2.5%.
The U.S. dollar index rose about 0.5% overnight to 101.2, its biggest rise since September 25, which was also helped by a stronger-than-expected opening reading. jobs in the United States.
Israel said Iran fired more than 180 ballistic missiles and Iran’s Revolutionary Guard Corps said the attack was retaliation for Israel’s assassination of militant leaders and aggression in Lebanon against the armed movement Hezbollah, supported by Iran.
No injuries were reported in Israel. Iran had already struck Israel in April, without causing major damage or a lasting reaction on the financial markets. However, the start of an Israeli ground attack on Hezbollah inside Lebanon and Israel’s promise to respond opens the possibility of escalation.
Market reaction is centered on oil prices and ANZ analysts noted that further moves will likely be determined by Israel’s response and whether it attacks Israel’s military or oil industry. ‘Iran.
The sentiment pushed the Australian dollar as low as $0.6883, although losses were limited by upbeat retail sales data released on Tuesday. Sterling fell 0.7% overnight and was steady at $1.3278 in early Asian trading.
Imre Speizer, a strategist at Westpac, said the Middle East was unpredictable, but absent escalation, market sentiment could recover and focus shift back to the economy.
In New Zealand, a business survey showing a rapid slowdown in price pressures increased the chances that New Zealand’s central bank will cut rates by 50 basis points next week. Westpac and BNZ have revised their forecasts to expect a 50 basis point cut and markets are pricing in a 77% chance of a 50 basis point cut.
Later today, Democrat Tim Walz and Republican JD Vance face off in a vice presidential debate and U.S. private employment data is due.
Traders are also keeping a watchful eye on a labor dispute at U.S. docks.
Dockworkers on the East Coast and Gulf of Mexico began their first large-scale strike in nearly 50 years Tuesday, halting the flow of about half of the nation’s shipping.
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