BY COMFORT OGBONNA
The U.S. dollar strengthened against major global currencies on Thursday, reversing losses from the previous two sessions after U.S. President Donald Trump delivered a closely watched address on the conflict with Iran that dampened hopes for a quick end to the Middle East war and rattled investor confidence.
In his speech, Trump warned that the United States would intensify strikes against Iran over the next two to three weeks. However, he stopped short of providing a clear timeline for when the conflict might end, leaving investors uncertain about the duration of the military campaign and its broader impact on global markets.
The lack of clarity quickly pushed investors toward safer assets. Traders moved out of riskier investments such as equities and emerging-market currencies and instead piled into the U.S. dollar, widely viewed as a safe haven during periods of geopolitical tension.
The U.S. Dollar Index, which measures the strength of the dollar against a basket of major currencies, rose nearly 0.5% and climbed back above the key 100 level as demand for the greenback surged.
Thursday’s rally erased most of the dollar’s losses from earlier in the week, when investors had briefly grown optimistic that the Iran conflict might de-escalate. With renewed concerns about a prolonged war, the currency now appears set for another week of gains.
Financial markets broadly reacted to the escalation fears. Global equities slipped while oil prices surged sharply. The benchmark Brent crude contract climbed more than 6%, trading close to $110 per barrel as traders worried that the conflict could lead to sustained disruptions in global energy supplies.
The surge in oil prices has also revived concerns about stagflation—a troubling economic environment where high inflation coincides with slowing economic growth.
Carol Kong, currency strategist at Commonwealth Bank of Australia, said markets were beginning to accept that the conflict could worsen before improving.
“Trump’s comments failed to reassure markets, and investors are now starting to realize that the war may escalate further before any de-escalation occurs,” Kong said.
She added that the dollar could continue strengthening against major currencies as investors factor in the likelihood of slower global economic growth.
“The dollar can definitely rise further from here against most major currencies as markets wake up to the reality that the global economy may slow materially from this point,” she said.
Among major currencies, the Euro weakened to about $1.1537, while the British Pound Sterling fell to roughly $1.3233, both declining around 0.5% against the U.S. dollar after gaining earlier in the week.
Risk-sensitive currencies were hit even harder. The Australian Dollar and New Zealand Dollar each fell roughly 0.7%, hovering near two-month lows as investors reduced exposure to assets tied closely to global growth.
Meanwhile, the Japanese Yen weakened about 0.4% to around 159.38 per dollar. Despite the decline, the yen remained below the psychologically important 160 level that market participants often view as a threshold that could prompt intervention by Japanese authorities to support the currency.
Trump’s comments also pushed U.S. government bond yields higher during Asian trading hours, reflecting fears that surging oil prices could keep inflation elevated and reduce the likelihood of interest-rate cuts.
The rise in yields highlights growing concerns that higher energy costs may complicate the policy outlook for the Federal Reserve, which has been weighing when to begin easing monetary policy.
Attention now turns to the upcoming U.S. labor market report. Economists expect the closely watched nonfarm payrolls data for March to show that about 60,000 jobs were added to the economy, according to the median estimate in a survey of economists.
Kyle Rodda, senior financial market analyst at Capital.com, warned that weaker-than-expected jobs data could further unsettle markets.
“Another miss could rattle investors and amplify concerns about stagflation,” Rodda said, noting that persistent inflation driven by higher energy prices could limit the Federal Reserve’s ability to cut interest rates in the near term.
He added that markets could become especially volatile as investors head into the long holiday break tied to Easter.
“With geopolitical tensions rising and key economic data approaching, trading conditions could be particularly choppy going into the Easter long weekend,” Rodda said.
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