US dollar hits one-week high as Iran strikes boost safe-haven demand

The US dollar climbed to its highest level in a week during Asian trading on Wednesday as renewed US strikes on Iran increased demand for safe-haven assets.

Meanwhile, the New Zealand dollar strengthened after the country's central bank raised interest rates and signaled that additional monetary tightening could follow.

The greenback gained 0.2% against the Japanese yen to trade at 162.46, extending its advance for a fourth consecutive session.

The move pushed the currency to its strongest level since July 2.

The euro slipped 0.1% to $1.1405, while the British pound edged 0.1% lower to $1.3351.

New Zealand dollar jumps after rate hike

The New Zealand dollar rose 0.5% to a high of $0.5705 after the Reserve Bank of New Zealand increased its benchmark interest rate by 25 basis points to 2.5%, in line with economists' expectations.

The central bank said "some further reduction in monetary stimulus is likely to be required" to keep inflation under control, signaling that additional policy tightening may be needed in the coming months.

The Australian dollar also moved higher, gaining 0.1% to $0.6938.

Meanwhile, the US dollar index, which measures the greenback against a basket of six major currencies, touched 101.210 for the first time since July 2.

Iran developments support demand for the dollar

Demand for the US dollar strengthened after the United States launched a new wave of strikes against Iran on Tuesday.

The US also revoked a licence that had allowed Iran to sell oil after three tankers were attacked in the Strait of Hormuz.

The developments increased demand for the dollar, which is widely regarded as a global safe-haven currency during periods of geopolitical uncertainty.

In a research report, DBS analysts said, "For now, the market is keeping to the playbook that Tehran and Washington are still in a high-stakes game to gain leverage during the temporary truce, and that Tuesday’s incident would not descend back into a full-scale war."

Oil extends rally as geopolitical risks remain in focus

Brent crude futures rose 2.5% to $76.03 per barrel during Asian trading on Wednesday, extending gains for a second consecutive session as markets continued to assess the implications of the latest developments involving Iran.

Higher oil prices reflected investor concerns over potential disruptions to energy supplies following the attacks and the renewed military action.

Yen weakens as BOJ policymaker signals caution

The Japanese yen moved closer to a fresh 40-year low after Bank of Japan board member Toichiro Asada, the lone dissenter to the central bank's June interest rate increase, reiterated his cautious stance on further policy tightening.

His comments reinforced expectations that the Bank of Japan could remain cautious about tightening monetary policy despite the yen's prolonged weakness.

Cryptocurrencies trade lower

In the cryptocurrency market, Bitcoin fell 1.3% to $62,851.94, while Ether declined 1.9% to $1,749.96.

The declines came as investors favored traditional safe-haven assets, including the US dollar, amid heightened geopolitical tensions and broader market uncertainty.