Dollar stays near 18-month peak as geopolitical tensions intensify

what happened

According to Newsmetry API, the greenback was little changed early in Tuesday’s Asian session, with some US markets closed for a holiday. Geopolitical tensions increased after fresh strikes hit energy facilities in the Middle East and Ukraine. The dollar index, which tracks the US currency against six major peers, stood at 102.56 after adding 0.3% on Monday. It remained close to its strongest level since April last year.

“The combination of higher relative interest rates, stronger US growth and increasing demand for defensive USD exposure continues to provide a powerful set of tailwinds for the greenback,” said Chris Weston, head of research at Pepperstone Group Ltd in Melbourne. Higher energy prices and rising US Treasury yields have recently helped the dollar outperform its main counterparts, while stress in French government bonds has weighed on the euro. The gap between French and German bond yields widened on Monday.

The euro was unchanged at $1.1159, and sterling also held at $1.3209. The US currency slipped 0.1% against the yen to 158.435 after Bank of Japan figures showed wholesale prices climbing 6.8% in the year through September, below the market median estimate of 7.6%. The offshore yuan was steady at 6.6950 per dollar, near its strongest point in four years.

The Australian dollar eased 0.1% to $0.6956 after minutes from the Reserve Bank of Australia’s September meeting showed a unanimous fourth rate increase this year. The bank said inflation might remain persistent, leaving scope for a fifth hike if required. The New Zealand dollar fell 0.1% to $0.5582, close to an 18-month low. Bitcoin dropped 2% to $81,365.56 and ether lost 3.8% to $2,422.06. Brent futures declined 0.9% to $105.74, partly reversing Monday’s 1.8% rise following attacks on energy infrastructure in Saudi Arabia and Ukraine.

why it matters

The session links dollar strength to geopolitical uncertainty, energy costs and elevated Treasury yields. Moves in oil and changing central-bank expectations continue to shape major currencies and digital assets.

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