The dollar is strengthening on foreign exchange markets today. This is happening simultaneously as the yield on key US bonds is moving at its highest level since October 2023 and oil prices remain significantly above $100 per barrel. US President Donald Trump said that Ukraine and Russia have agreed to cease mutual attacks on energy infrastructure. According to him, these attacks, not the American strike on Iran, led to the rise in fuel prices.
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Dollar benefits from higher investor risk aversion
The dollar index, which expresses the value of the dollar against a basket of six major world currencies, was up nearly 0.5 percent at 99.586 points around 17:20 CEST. Against the Japanese yen, the dollar strengthened by 0.5 percent to 154.415 JPY. The euro lost 0.4 percent against the dollar to 1.1545 points. Against the yen, the common European currency showed an increase of almost 0.1 percent to 178.297 JPY.
Warnings from executives of major companies in the artificial intelligence (AI) sector regarding the potential risks of the rapid development of this technology weakened investors’ appetite for risk, which supported the dollar. It is typically perceived as one of the safer assets.
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Rising oil prices and bond yields increase nervousness
Investors were also unnerved by the sharp rise in oil prices and the increase in global bond yields to multi-year highs. Attacks by Yemeni pro-Iranian Houthi rebels on targets in Saudi Arabia and the shutdown of a main Saudi oil pipeline running outside the Strait of Hormuz further deepened concerns about energy supplies, Reuters reported.
“Developments in the Persian Gulf remain worrying and some reports regarding artificial intelligence continue to put pressure on stocks. In such an environment, the dollar should remain strong,” said currency market strategist Francesco Pesole from Dutch bank ING.
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Source: ÄŒTK
