Dollar Extends Gains as Safe-Haven Demand Increases
The U.S. dollar strengthened for a second consecutive trading session in Asian markets on Monday, supported by stronger-than-expected U.S. employment data and renewed safe-haven demand amid uncertainty surrounding the fragile U.S.-Iran ceasefire.
Investors continued to move toward the dollar as geopolitical tensions in the Middle East and resilient U.S. economic data boosted confidence in the American currency.
Euro, Yen and Pound Weaken Against the Dollar
The euro declined 0.2% to $1.1757, while the Japanese yen weakened 0.3% to 157.155 per dollar. The British pound also slipped 0.3% to $1.3590.
Commodity-linked and risk-sensitive currencies also moved lower. The Australian dollar fell 0.2% to $0.7229, while the New Zealand dollar dropped 0.3% to $0.5948.
According to Alex Loo, senior macro strategist at TD Securities in Singapore, factors that could pressure the dollar have become less visible due to hawkish Federal Reserve signals, resilient U.S. economic data, and the ongoing geopolitical deadlock in the Middle East.
Federal Reserve Split Supports the Dollar
The Federal Reserve kept interest rates unchanged last month, a decision widely expected by financial markets. However, the meeting revealed one of the deepest internal divisions within the central bank in decades, with three policymakers opposing guidance that pointed toward future rate cuts.
The stronger U.S. labour market data released on Friday further reinforced expectations that the Fed may maintain higher interest rates for longer.
The latest figures showed that non-farm payrolls increased by 115,000 jobs in April, nearly double market expectations.
Oil Prices Jump After Trump Rejects Iran Response
Oil prices surged during Asian trading after President Donald Trump rejected Iran’s response to a U.S. proposal for peace negotiations.
Brent crude oil rose 4.5% to $105.85 per barrel as hopes for a quick resolution to the 10-week conflict weakened.
“I don’t like it — TOTALLY UNACCEPTABLE,” Trump wrote on Truth Social, without providing additional details.
The escalation in geopolitical uncertainty increased demand for safe-haven assets, helping support the U.S. dollar.
Chinese Yuan Strengthens Ahead of Trump-Xi Meeting
Despite broader dollar strength, the Chinese yuan gained 0.1% in offshore trading to 6.7939 per dollar, marking its eighth straight day of gains.
Markets are now focused on the upcoming meeting between President Donald Trump and Chinese President Xi Jinping later this week.
According to U.S. officials, the two leaders are expected to discuss major geopolitical and economic issues including Iran, Taiwan, artificial intelligence, nuclear weapons, and critical minerals.
China Economic Data Beats Expectations
Economic data released earlier Monday showed that China’s producer prices surged to a 45-month high in April, largely driven by rising global energy prices.
The data followed reports over the weekend showing that China’s export growth accelerated last month as manufacturers rushed to meet growing global demand linked to artificial intelligence technologies.
Dollar Index Holds Firm on Strong U.S. Data
The U.S. dollar index, which tracks the greenback against a basket of six major currencies, rose 0.1% to 98.103.
Although the dollar faced pressure last week amid speculation over a potential reopening of the Strait of Hormuz, analysts said resilient U.S. economic data continues to provide strong support for the currency.
Strategists at Barclays noted that markets remain highly focused on geopolitical developments and the possibility that progress in the Middle East could coincide with the upcoming Trump-Xi summit.
However, they added that the U.S. economy and labour market continue to show signs of stability across multiple economic indicators.
