The U.S. dollar index, which tracks the currency against a basket of other currencies, saw its biggest rise since September 25, climbing about 0.5% overnight to 101.2. The rise follows an Iranian missile attack on Israel, sparking increased investor interest in safe havens amid concerns over escalating conflict in the Middle East.
The euro remained subdued in early trade in Asia, remaining below the $1.10 mark after suffering its biggest fall in almost four months. The yen held steady at 143.45 per dollar, and the Swiss franc also remained stable at 0.8463 per dollar. The New Zealand dollar recovered from a 1.1% fall, trading at $0.6283, while oil prices rose 2.5%.
The Iranian missile barrage, which included more than 180 ballistic missiles, was reported as an act of retaliation by Iran’s Islamic Revolutionary Guard Corps for what they say were Israeli assassinations of militant leaders and hostile actions against Hezbollah in Lebanon. Israel reported no injuries from the attack, and financial markets showed no significant reaction to a similar strike in April.
However, the potential for a wider conflict looms as Israel launched a ground offensive against Hezbollah in Lebanon and expressed its intention to retaliate, which could lead to escalation.
ANZ market analysts have suggested that future market movements, particularly regarding oil prices, will likely depend on Israel’s further actions and whether they target the country’s military or oil infrastructure. ‘Iran.
In Australia, the dollar came under pressure, trading at $0.6883, although losses were mitigated somewhat by positive retail sales data released on Tuesday. Sterling also saw a decline, falling 0.7% overnight, but held steady at $1.3278 in early Asian trade.
In New Zealand, a business survey indicated a rapid cooling of inflationary pressures, increasing the likelihood that the country’s central bank could implement a 50 basis point rate cut next week. Financial institutions such as Westpac and BNZ have revised their forecasts to anticipate such a reduction, with market odds favoring a reduction of 50 basis points to around 77%.
Additionally, the political arena in the United States is gearing up to witness a vice presidential debate later today between Democrat Tim Walz and Republican JD Vance. Markets are also awaiting the release of private employment data in the United States.
Amid these financial updates, traders are monitoring a major labor dispute in the United States. Dockworkers on the East Coast and Gulf began their first major strike in nearly half a century Tuesday, disrupting about half of the nation’s ocean freight operations.
Reuters contributed to this article.
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