US Dollar Soars Amid Geopolitical Tensions, Oil Prices Surpass $80
The US dollar has experienced its best daily performance in two weeks, buoyed by heightened geopolitical risks and speculators closing out positions ahead of key US labour market data. The Federal Reserve's preference to prioritize the fight against inflation means that employment figures are unlikely to alter prospects for a rate hike in September.
Oil prices have returned above $80 per barrel as investors doubt the durability of the Iran-Oman deal to reopen the Strait of Hormuz. Hardline figures in Tehran are demanding the removal of US and Israeli ships, as well as the lifting of sanctions and transit fees from unfriendly countries.
The strengthening of the greenback against major global currencies has meant that USDJPY bulls have already recouped half of the losses incurred due to coordinated currency intervention. Speculators are being aided by the wide spread between the Federal Reserve's and the Bank of Japan's interest rates, fuelling appetite for carry trades.