US Dollar Surge Dents NZD as Oil Prices Volatile

The US dollar strengthened against most G10 currencies yesterday, contributing to a dip in NZD/USD. The USD index advanced, largely due to yen weakness, while the euro also edged lower.

Bond market weakness weighed on broader risk sentiment, with US equity futures soft through European trading before recovering on hopes of an agreement to restore energy flows through the Strait of Hormuz. The S&P 500 is close to flat in afternoon trading, while major European indices closed modestly lower.

Oil prices were volatile overnight, with Brent crude futures initially rising above US$108 per barrel after a senior Iranian military official warned that Tehran could broaden the conflict to the Indian Ocean if the US or Israel launched further attacks. However, this increase proved temporary as Reuters reported that the US and Iran were exploring a phased agreement to reopen the Strait of Hormuz.