NEW YORK: The dollar climbed on Monday after peace talks between the US and Iran broke down and as the US Navy prepared to blockade Iranian ports, while the Hungarian forint rallied after the center-right Tisza party defeated Viktor Orban in a landslide election victory. US crude rose 6.94 percent to USD103.27 a barrel and Brent rose to USD101.73 per barrel, up 6.86 percent
on the day as the US military’s regional Central Command said the blockade would start at 10 a.m. ET (1400 GMT) on Monday, to be “enforced impartially against vessels of all nations” entering or leaving Iranian ports in the Gulf and the Gulf of Oman, putting a recent ceasefire in jeopardy.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.16 percent to 98.88, with the euro down 0.18 percent at USD1.1698. The greenback is coming off its biggest weekly percentage drop since mid-January.
“The market went into the weekend optimistic, the dollar finished near its lows, so the short-term market was leaning the wrong way,” said Marc Chandler, chief market strategist at Bannockburn Capital Markets in New York. “Given that we could be on the verge of a major escalation, I’d say the market is showing a lot of restraint.”
The risk-sensitive Australian dollar weakened 0.21 percent versus the dollar to USD0.7045 and the New Zealand dollar edged down 0.09 percent versus the greenback to USD0.5827.
The war in the Middle East has pushed crude prices up about 40 percent since the end of February, when the war began, heightening concerns about higher inflation and lower global growth, also known as stagflation.
The dollar has tended to gain when tensions between Iran and the US have risen, given its status as a safe haven and the relative insulation of the US to imported energy-price inflation.
Against the Norwegian krone,, the dollar weakened 0.47 percent to 9.488 and the Canadian dollar strengthened 0.01 percent versus the greenback to CD1.383 per dollar, with both currencies sensitive to movements in crude prices.
“Beneath the surface, today’s price action looks less risk-led and more driven by relative terms of trade shifts,” said Goldman Sachs analyst Teresa Alves in a note.
HUNGARIAN FORINT RISES The Hungarian forint surged after veteran nationalist leader Viktor Orban lost power to Peter Magyar’s Tisza party in Sunday’s national election after 16 years in office. The currency jumped 2.85 percent versus the dollar at 311.51 after touching 309.34, its strongest level since February 2022. “The polls showed Orban was going to lose, that he actually did lose and conceded is a good sign, but this is not like a shift to some kind of left position,” said Chandler.
YEN WEAKENS Against the yen, the US dollar was up 0.28 percent to 159.74 as yields on Japan’s benchmark 10-year government bonds advanced 3.2 basis points to 2.496 percent, the highest in nearly three decades.
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