The US dollar maintained its strength at the start of Asian trading on Tuesday, supported by rising geopolitical tensions following attacks on energy infrastructure in the Middle East and Ukraine. The US dollar index, which tracks the dollar against a basket of six currencies, stood at 102.56, near its highest levels since April 2023. Analysts noted that higher interest rates, stronger US growth, and increased demand for defensive dollar exposure are driving the currency's resilience.
The euro and British pound remained steady at $1.1159 and $1.3209, respectively, as rising energy costs and higher US Treasury bond yields weighed on other major currencies. The Japanese yen weakened slightly to 158.435 yen after data showed wholesale prices rose 6.8% year-over-year, missing market expectations. The Chinese yuan held near a four-year high at 6.6950 yuan in offshore trade, while the Australian dollar dipped 0.1% to $0.6956 following the Reserve Bank of Australia's rate hike decision.
The Reserve Bank of Australia signaled potential for further rate increases if inflation remains stubborn, while the New Zealand dollar fell 0.1% to $0.5582, trading near an 18-month low. Cryptocurrencies saw declines, with Bitcoin dropping 2% to $81,365.56 and Ether falling 3.8% to $2,422.06. Meanwhile, Brent crude futures slipped 0.9% to $105.74 after partial retracement from Monday's gains driven by geopolitical tensions.