Dollar set for seventh straight daily decline
The dollar’s seven-day losing streak would be its first since December last year
The dollar was steady on Tuesday but set for a seventh consecutive daily decline, as markets weighed supply risks from a reported U.S. blockade of Iranian shipping in the Strait of Hormuz against hopes for a diplomatic breakthrough between Washington and Tehran.
The dollar index added 0.05% to 98.39, hovering near its lowest since March 2, the first trading day after the U.S.-Israeli war with Iran erupted.
The dollar’s seven-day losing streak would be its first since December last year.
The euro added 0.02% to $1.1759, while sterling tacked on 0.01% to $1.3505. The yen edged up 0.16% to 159.19 per dollar.
The series of comments has brought some relief to the markets, as it has renewed the possibility of a diplomatic resolution, said Keiichi Iguchi, senior strategist at Resona Holdings.
The U.S. currency has benefited from a safe-haven bid since the war began.
U.S. crude futures were down more than $2 in early Asian trade at $96.99 a barrel.
The yen, though, remains vulnerable to selling pressure on concerns that the nation’s trade balance will deteriorate as the risk of crude oil price staying elevated increases, Iguchi said.
Interest rate swaps on Monday indicated a 40% chance of a BOJ rate hike this month, down from 57% from Friday, according to Tokyo Tanshi data.
We’re very much of the view that if the BOJ decides to stand pat at the end of April, then the risks are that the dollar-yen exchange rate is going to punch up through 160 yen against the dollar, said Ray Attrill, head of forex strategy at National Australia Bank, in a podcast.
Markets see 160-yen-per-dollar as a red line that raises the odds of intervention.
BOJ Governor Kazuo Ueda on Monday emphasised vigilance against fallout from the Iran war, shifting focus from the central bank’s usual pledge to steadily raise interest rates.
The Australian dollar weakened 0.23% versus the U.S. dollar to $0.7078. New Zealand’s dollar weakened 0.15% versus the U.S. dollar to $0.5857.
In cryptocurrencies, bitcoin added 1.66% to $74,409.95. Ethereum advanced 5.17% to $2,369.96.