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View all search resultsDollar surges as Middle East war sends oil above $110 a barrel
The dollar was up 0.9 percent at $1.1518 on the euro, its highest since November.
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This handout natural-color image acquired with MODIS on NASA's Terra satellite taken on February 5, 2025 shows the Gulf of Oman and the Makran region (center) in southern Iran and southwestern Pakistan, and the Strait of Hormuz (left) and the northern coast of Oman (bottom). Iran is considering relocating its capital from congested and smoggy Tehran to the coastal region along the Gulf, an ambitious plan to tackle the city's urban challenges and boost the country's sanctions-hit economy. (AFP/NASA Earth Observatory)
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he safe-haven US dollar took another leg higher on Monday, rising to a three‑month peak versus the euro as oil surged past $110 a barrel and stocks slid on worries about the effects of a protracted Middle East war on global energy supplies.
The dollar was up 0.9 percent at $1.1518 on the euro, its highest since November.
Risk-sensitive sterling and the Australian and New Zealand dollars fell roughly 1 percent versus the greenback, while Brent and US crude futures shot up 20 percent or more at their highest points.
"Oil remains the transmission channel into inflation expectations, rates and currency markets, with the dollar’s resurgence echoing the 2022 energy crisis," said Bob Savage, head of markets macro strategy at BNY.
"The week ahead will test whether markets continue to treat the current conflict as a contained shock or begin to price a more durable supply disruption."
The dollar, which notched its sharpest one-week rise in 15 months on the breakout of war last week, has been the most consistent safe-haven asset, as gold has faltered amid broad selling in anything that has lately made sharp gains.
"The dollar benefits from its twin status as a safe-haven and energy exporter," said Joe Capurso, Head of Foreign Exchange, International and Geoeconomics at Commonwealth Bank in Sydney.
"We expect the Iran-US war to escalate before it de-escalates. Iran is incentivised to strike back to gain leverage in future negotiations to end the war. The US and Israel are incentivised to degrade Iran’s offensive capabilities."
The dollar even gained 0.8 percent on its fellow safe haven, the Swiss franc.
It rose almost 0.5 percent to 158.63 yen and 1.2 percent to 1,498.30 won.
"Asia takes the brunt of the sharp escalation in oil prices and there are few places to run and hide," said Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho in Singapore.
"The dollar has to be the one outperforming, given Japan and Korea's exposures here and the sharp pain that can be expected."
