LONDON, April 12 - The U.S. dollar jumped against several major currencies in early Asia-Pacific trading as investors sought refuge in the American currency following the collapse of extended talks between Washington and Tehran. The unsuccessful negotiations left markets facing a seventh consecutive week of heightened uncertainty.
In a statement on Sunday, President Donald Trump said the U.S. Navy would begin blockading the Strait of Hormuz. The Strait is identified as a choke point for 20% of the world’s daily energy supplies and has been effectively closed by Iran since the war began in late February, according to the reporting. That disruption has contributed to an increase in oil prices of over 30% and has amplified concerns about a broad rise in inflation.
Market participants moved into the dollar, which has been viewed as a safer asset in the present environment - a perception reinforced by the relatively limited exposure of the United States to imported energy-price inflation. In initial trade, that demand saw the euro fall 0.5% to $1.166. The dollar also strengthened slightly against the Japanese yen, gaining 0.1% to trade at 159.43.
The combination of stalled diplomacy, a reported naval blockade and significant oil price gains has pushed investors to re-evaluate risk across asset classes. With the Strait of Hormuz cited as a major conduit for the world’s energy flows and described as effectively shut since late February, the reported squeeze on supply is highlighted as a direct factor behind the recent jump in oil prices and the related inflationary worries weighing on markets.
These developments occurred as global markets entered another week marked by uncertainty. The dollar's rally in early trading reflects its continuing role as a refuge when geopolitical tensions and supply disruptions raise the prospect of broader economic and market volatility.
Market quote snapshots:
- Euro: down 0.5% at $1.166
- Dollar vs Japanese yen: up 0.1% at 159.43