Dollar gains ground as fragile US-Iran ceasefire sends oil soaring

The US dollar strengthened against major global currencies in early Asian trading on Monday as renewed tensions over the fragile US-Iran ceasefire boosted demand for the greenback as a safe-haven asset.

The euro slipped 0.2 per cent to $1.1767, while the Japanese yen weakened 0.1 per cent to 156.905 per dollar. The British pound fell 0.3 per cent to $1.3597, as investors turned cautious amid rising geopolitical uncertainty in West Asia.

The dollar’s advance followed stronger-than-expected US labour market data released on Friday, which reinforced expectations that the Federal Reserve could keep interest rates elevated for longer.

Geopolitics back in focus

Investor sentiment was also shaken after hopes of a breakthrough in the 10-week-old US-Iran conflict faded over the weekend.

Oil prices surged after US President Donald Trump rejected Iran’s response to a Washington-backed peace proposal, prolonging disruptions in the Strait of Hormuz and heightening fears of a prolonged energy supply shock.

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Brent crude climbed more than 3 per cent to around $104.65 a barrel, while US West Texas Intermediate crude neared $99 per barrel as traders reacted to the escalating tensions.

Trump wrote on Truth Social that Iran’s latest response was “TOTALLY UNACCEPTABLE”, without elaborating further, effectively dashing hopes for an immediate diplomatic resolution.

Strong jobs data lifts dollar

The dollar index, which tracks the US currency against a basket of six major peers, traded at 98.001 in early Asia trade.

Support for the greenback also came from April’s US non-farm payrolls report, which showed the economy added 115,000 jobs — nearly double market expectations.

The stronger labour market data reinforced market expectations that the Federal Reserve may delay interest-rate cuts despite concerns about slowing global growth.

Oil supply fears intensify

Energy markets remained under strain as the Strait of Hormuz continued to operate under severe disruption following weeks of conflict.

Brent crude futures rose $3.18, or 3.14 per cent, to $104.47 a barrel, extending gains from Friday. US WTI crude climbed $3.09, or 3.24 per cent, to $98.51 a barrel.

Shipping risks in the Gulf have also intensified. Data from Kpler showed that two more oil tankers carrying crude exited the Strait of Hormuz last week with tracking systems switched off in an apparent attempt to avoid Iranian attacks.

Trump-Xi meeting in focus

Attention is now turning to Trump’s expected visit to Beijing later this week, where he is scheduled to meet Xi Jinping.

According to reports, the two leaders are expected to discuss Iran, Taiwan, artificial intelligence, nuclear weapons and critical minerals.

With inputs from agencies.