Dollar gains on Middle East tensions; AUD leads intraday strength

Geopolitical risks in the Middle East drive safe-haven demand for the dollar amidst a Neutral FSI of 57, while upcoming US inflation data is keenly awaited.

Geopolitical risks buoy dollar, weigh on commodities

• The US dollar garnered significant safe-haven demand amidst escalating Middle East tensions. The euro reportedly fell as a Fed official warned and Iranian attacks bolstered the US dollar, according to FXStreet.
• Headlines suggest two Iranian cruise missiles reportedly struck two UAE tankers, the Mombasa and the Al Bahiyah, in the Strait of Hormuz, according to Reuters, contributing to increased risk aversion.
• WTI crude oil prices reportedly soared amidst these rising tensions, per FXStreet. Gold, conversely, fell below $4,000 after the US reimposed a blockade on Iran and a 20% toll on Strait of Hormuz shipping, as investors look ahead to upcoming US CPI data.

Asia-Pacific currencies see mixed moves

• The Australian dollar weakened to near 0.6900 as the US launched further attacks against Iran, according to FXStreet. However, on an intraday basis, our metrics show the Australian dollar as the strongest currency, suggesting a session-specific bounce despite broader geopolitical pressures and lingering effects of RBA rate hikes.
• The New Zealand dollar ranks as the weakest currency in today's session. This comes as New Zealand's business confidence recovered, though rising cost pressures reportedly cloud the outlook for the RBNZ, as InvestingLive reports. RBNZ's Conway indicated inflation is expected to return to 2% in the medium term.

Key events today

• USD · Core CPI m/m: SCHEDULED · forecast 0.2% vs previous 0.2%
• USD · CPI y/y: SCHEDULED · forecast 3.8% vs previous 4.2%
• GBP · BOE Gov Bailey Speaks: SCHEDULED