NEW YORK: The dollar advanced on Tuesday, following two straight sessions of slight declines, while the yen held near a four-decade low, as investors continued to watch for signs of possible intervention by Japanese authorities to support the currency.
The greenback showed little reaction to reports that Iran fired missiles at ships in the Strait of Hormuz overnight, which sources said left a Qatari LNG tanker at risk of exploding and a Saudi-flagged crude oil tanker damaged in the waterway.
US crude rose 1.4 percent to USD69.51 a barrel and Brent rose to USD73.05 per barrel, up 1.46 percent on the day on renewed concerns over supply disruptions.
“Ceasefires, by their very nature, fray, but it doesn’t mean that they’re over. And I think that neither the US nor Iran are looking to extend the conflict, so that’s what the market’s got confidence in,” said Marc Chandler, chief market strategist at Bannockburn Capital Markets in New York.
“The market’s just sort of churning well-worn ranges.”
The dollar index, which measures the greenback against a basket of currencies, gained 0.12 percent to 100.98, with the euro down 0.11 percent at USD1.1426.
Federal Reserve Bank of New York President John Williams said in a television interview on Tuesday that he has grown a little less worried about the state of price pressures in the economy due to the recent retreat in energy prices, which he expects to continue.
Meanwhile, European Central Bank Governing Council member and Bank of Italy Governor Fabio Panetta said the outlook for the euro zone economy remains fragile, and called for monetary policy decisions to be tested against a range of scenarios given the major shifts in the global economy.
On the data front, the Commerce Department said the US trade gap jumped 42.2 percent to USD77.6 billion, compared with the estimate of economists polled by Reuters calling for the deficit to be USD78.5 billion, as the AI investment surge helped drive imports of capital goods to a record high.
The Japanese yen strengthened 0.08 percent against the greenback to 161.95 per dollar, after touching 161.66, though it remained not far from a 162.83 trough hit last week. The yen found some support late last week as traders grew wary of a possible shift in Japan’s intervention strategy, though they said the currency’s sudden jump on Thursday was not indicative of official action.
Sterling weakened 0.19 percent to USD1.3364 after earlier hitting a three-week high of USD1.3401.
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