At 157.73 yen and $1.1632 to the euro, the greenback was steady in early Asian trade, but it retreated from the day’s early highs after U.S. President Donald Trump said the war against Iran was “too complete.” Washington was “very far” from his initial four-to-five-week timeline, he told CBS News.
The comments were quickly dismissed as “absurd” by Iran’s Revolutionary Guard, but traders appeared to shrug off deeper concerns about an oil shock and put them in a wait-and-see position.
Brent crude futures traded at $92.46 a barrel in Asian morning, down from Monday’s high of nearly $120.
The risk-sensitive Australian dollar, which has fallen about 70 cents since the start of the war, was steady at around $0.7068.
“The market is just taking a breather,” said Rodrigo Cutrell, senior currency strategist at National Australia Bank in Sydney.
“We are cautious in the sense that it may not be as simple as just declaring the end of the war… Our feeling is that we have not seen the end of the instability.” The dollar has been a safe-haven choice for traders as US and Israeli attacks on Iran have frozen oil and gas exports through the Strait of Hormuz and pushed up energy prices.
Investors worry that it could dampen global growth by acting as a tax on trade and consumption, while at the same time pushing central banks away from cutting rates.
Sterling held back from Monday’s dip at $1.3412 and the New Zealand dollar was steady at $0.5932.
A Deutsche Bank analysis on Monday suggested that a major market move away from riskier assets could require oil prices to remain at higher levels, a policy pivot from central banks and signs of a broader economic slowdown.
“How close are we to meeting those limits? Closer than we were a week ago,” said strategist Henry Allen.
“But in many metrics we are not there yet, which explains why equities have not yet seen the decline of the bear market, as we saw in 2022,” he said, after the energy shock caused by Russia’s invasion of Ukraine.
