Published: Wed, May 09, 2018
IT&Software | By Alfonso Woods

Global Markets: Dollar hits 2018 high on Iran deal worry; crude slumps

Global Markets: Dollar hits 2018 high on Iran deal worry; crude slumps

The euro slid to a new 2018 low on Wednesday before recovering slightly, as investors bet on dollar strength due to relatively higher interest rates, while the USA exit from an Iran nuclear pact and political uncertainty in Italy were also factors. Trump is expected to make an announcement on the future of the Iranian deal at 2 p.m. (1800 GMT) on Tuesday.

Diminished market concerns over perceived risks from the U.S.

Commodity-linked and emerging market currencies fell on worries that a possible US withdrawal would hit risk appetite in financial markets, holding their losses after Trump's announcement.

A US withdrawal from the multination accord could impact Iranian crude exports and also fan geopolitical tensions in the Middle East, home to one-third of the world's daily oil supply.

Trump's decision to exit the accord was most keenly felt in oil markets, where prices rallied. The sell-off in these currency pairs rippled through the foreign exchange markets and prompted investors to unwind some of the best performing trades this year.

Concerns about the USA exit from an worldwide nuclear deal with Iran had also supported the dollar in early Asian trading.

The euro and sterling fell under renewed pressure, the former on prospects of early elections in Italy and the latter as hopes waned of a Bank of England rate increase this week.

The dollar's pullback was moderated by higher USA yields underpinned by expectations of rising US inflation and a swelling US budget deficit.

The single currency EURJPY= fell over 0.5 percent to 129.32 yen.

Some of the U.S. dollar's biggest gains on Tuesday came against the euro and the Australian dollar which declined by 0.4 per cent and 0.8 per cent respectively.

Silver rose 0.2pc at $16.47 an ounce, earlier hitting close to a one-week low at $16.30.

The Dow Jones Industrial Average fell 73.68 points, or 0.3 percent, to 24,283.64. The latest leg in the U.S. dollar's run higher came as sterling and the euro came under renewed pressure, the former from waning expectations of a Bank of England rate increase this week and the latter from prospects of early elections in Italy.

Thursday's USA consumer price index for April should show whether inflation is approaching the Fed's 2 percent goal. It was last up 0.4 percent at 93.100 in late USA trading.

This story has not been edited by Firstpost staff and is generated by auto-feed.

Like this: