Global currency markets remained cautious on Tuesday as investors awaited key US inflation data, while rising Middle East tensions supported oil prices and kept the Japanese yen under pressure.
The US dollar index, which tracks the greenback against a basket of major currencies including the yen and the euro, slipped 0.04% to 101.23. Market attention is focused on the release of the US June Consumer Price Index (CPI), followed by the June Producer Price Index (PPI) and Federal Reserve Chair Kevin Warsh’s first semiannual testimony before Congress.
Geopolitical tensions also remained in focus after US President Donald Trump said Washington was reinstating a naval blockade on Tehran and would keep the Strait of Hormuz open for a fee following renewed missile and drone attacks. Over the weekend, US and Iranian forces exchanged heavy strikes, while Tehran said it had again closed the critical shipping route.
Oil prices climbed 2% on Tuesday, reaching their highest level in 4 weeks after the US announcement. Brent crude had already surged 9.6% in the previous session, marking its biggest daily gain since May 2020.
The euro rose to $1.1388, while sterling gained 0.07% to $1.3355 against the dollar.
Meanwhile, Federal Reserve Governor Christopher Waller said interest rates may need to rise “in the near term” if inflation continues to stay well above the central bank’s 2% target. Economists expect the June core CPI to increase 0.2% month-on-month, while Fed funds futures currently price in around 30 basis points of rate hikes this year.
The Japanese yen traded at around 162.38 per dollar, remaining close to its 40-year low. Investors continued to monitor the possibility of intervention by Japanese authorities. Earlier support for the yen weakened after reports suggested there were no immediate plans to change the asset allocation of Japan’s state pension funds.
The Australian dollar gained 0.07% to $0.6921, while the New Zealand dollar rose nearly 0.5% to $0.5776. In cryptocurrencies, Bitcoin increased 0.49% to $62,455.94, while Ether climbed 1.02% to $1,783.63.
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