The US dollar kept its head above water on Wednesday, extending its 0.8% surge from the previous session. Fueling its climb was a general sense of wariness among investors, evident in a rise in Treasury yields and a pullback on Wall Street.
Adding to the cautious atmosphere was a flare-up in Middle Eastern tensions. Iran’s deployment of a warship to the Red Sea, a symbolic challenge to US presence in the key trade route, cast a shadow of uncertainty over the region.
Further dampening hopes for a swift return to easy money, investors pared back their expectations for aggressive interest rate cuts by major central banks this year. The focus now shifts to crucial US jobs data and the latest minutes from the Federal Reserve’s policy meeting, both due out this week, for clues on the direction of interest rates.
The rise in the dollar was broad-based, with particularly strong gains against the New Zealand dollar and the euro.